Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Halifax Corporation Bill [Lords],

As amended, to be considered Tomorrow.

London Electric and City and South London Railway Companies Bill,

As amended, considered.

Ordered, That Standing Orders 223 and 243 be suspended, and that the Bill be now read the Third time.—[The Chairman of Ways and Means.]

Bill accordingly read the Third time, and passed.

Stretford and District Gas Board Bill [Lords],

Consideration, as amended, deferred till To-morrow.

Land Drainage Provisional Order (No. 1) Bill,

Lords Amendment considered, and agreed to.

Buckhaven and Leven Gas Commission Order Confirmation Bill,

Read the Third time, and passed.

Oral Answers to Questions — MEXICO.

Major C. LOWTHER: 1 and 2.
asked the Under-Secretary of State for Foreign Affairs (1) whether the British members of the Mixed Claims Commission to be set up in Mexico have yet been appointed;
(2) whether, in view of the fact that an agreement has been entered into between the Mexican Finance Minister
and the International Committee of Bondholders in the matter of Mexican external obligations, that the claims of British subjects against the Mexican Government may be submitted to a Mixed Commission, and that the country is governed in a peaceable and constitutional manner, there are any further obstacles to recognition by His Majesty's Government of the Mexican Government; and, if so. what are they?

The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Cecil Harmsworth): I have not yet received particulars of the agreement reached between the Mexican Authorities and the International Committee, and am, therefore, unable to express any opinion on this point at the moment. The Mexican Government have forwarded to His Majesty's Government revised proposals for an agreement for the establishment of a Claims Commission, and these proposals are now being examined. Until this agreement has been finally negotiated, no appointments to the Commission can be made.

Major LOWTHER: Is it a fact that so long ago as last October, in all essentials, the proposals of the Government as to the Mixed Claims Commission were agreed upon by the Mexican Government, and why is it necessary to draw this matter out so?

Mr. HARMSWORTH: I do not think there has been any avoidable delay in the matter.

Major LOWTHER: With regard to the agreement arrived at with the bankers and the Mexican Government, would it not be perfectly possible to obtain a copy of the agreement from the many representatives of the bankers in this country?

Mr. HARMSWORTH: I will inquire about that. I should think it extremely probable that we have a copy at the Foreign Office, but I have not seen it myself.

Oral Answers to Questions — GREECE AND TURKEY.

Mr. L. MALONE: 4.
asked the Under-Secretary of State for Foreign Affairs whether a protest has been received from the Angora Government referring to the neutrality of the Constantinople zone, which was proclaimed by the
Allied Great Powers, and complaining that the port of Constantinople is used freely by Greece as a naval base for aggressive action against Turkish Black Sea ports; and whether His Majesty's Government intend to allow this action to continue, or what steps are being taken?

Mr. HARMSWORTH: The answer to the first part of the question is in the affirmative, but the protest has been addressed to the French and Italian Governments, as well as to His Majesty's Government, and inevitaby requires joint consideration.

Mr. MALONE: What action has been taken?

Mr. HARMSWORTH: I have said that it is under consideration.

Lieut.-Commander KENWORTHY: Is it correct that the Greek warships are using Constantinople as a base?

Mr. HARMSWORTH: Perhaps the hon. and gallant Member will put down a formal question as to that point.

Oral Answers to Questions — EGYPT.

BARAKAT PASHA.

Mr. SWAN: 5.
asked the Under-Secretary of State for Foreign Affairs what was the treatment recommended for Barakat Pasha; whether the treatment was recommended by a qualified dentist; and whether, in the absence of a qualified dentist in the Seychelles, the treatment could be carried out?

Mr. HARMSWORTH: The reply to the first portion of the question is in the negative. As regards the remainder, I have nothing to add to my reply to the question asked by the hon. Member on 5th April.

Mr. SWAN: Can we have an assurance that the work will not be carried out by a blacksmith?

Mr. HARMSWORTH: I am told that there is a qualified dental practitioner.

NEGOTIATIONS.

Mr. SWAN: 6.
asked the Under-Secretary of State for Foreign Affairs what are the names of the Egyptians who are at present concerned in the negotiations
with this country; and which of them are opposed to the return of Zaghloul Pasha from banishment?

Mr. HARMSWORTH: As regards the first portion of the hon. Member's question, I would refer to my reply to a question asked on 22nd June by the hon. and gallant Member for Bromley (Lieut.-Colonel James). I am not aware of the views held by individual Egyptian Ministers respecting the return of Zaghloul Pasha.

Mr. SWAN: In order that apprehensions may be removed, may I ask whether any recommendation has been made that they should declare an election and, from the chosen representatives, decide who shall negotiate with this country?

Mr. HARMSWORTH: That is a different question altogether. The question of an election rests with the Egyptian Government.

Mr. ORMSBY-GORE: Will it be necessary to decide who shall have a vote under the new Constitution before there can be any voting in Egypt?

Mr. HARMSWORTH: I think that is extremely probable.

Mr. SWAN: Ought it not to be left to the Egyptians themselves to decide their constitutional election?

Mr. HARMSWORTH: It is being left to the Egyptians themselves.

BRITISH DECLARATION.

Mr. SWAN: 7.
asked the Under-Secretary of St-ate for Foreign Affairs whether Lord Granville's Egyptian despatch of 1884, to the effect that in important questions affecting the administration of Egypt the advice of His Majesty's Government should be followed, and that Ministers and Governors must carry out this notice or forfeit their offices, has been officially revoked by His Majesty's Government now that they have declared Egypt to be an independent sovereign State?

Mr. HARMSWORTH: The Declaration to Egypt, which was approved by this House on the 14th March, replaces or revokes previous instructions with which it is inconsistent.

STATE RAILWAYS.

Lieut.-Colonel JAMES: 8.
asked the Under-Secretary of State for Foreign Affairs whether the revenues of the Egyptian State Railways constitute one of the securities to the foreign bondholders for the payment of Egyptian debt; whether he has any information that the Minister of Transport to the Egyptian Government has issued to himself and to members of his family 14 first-class free passes for life on the Egyptian State Railways; and whether, if this report be substantially accurate, steps can be taken to protect the interests of the Egyptians themselves or of the foreign bondholders against such abuses?

Mr. HARMSWORTH: Save in so far as the general revenues of Egypt constitute security for the payment of interest on the Egyptian Debt, the revenue of the State railways is not specifically charged. I have no information that the Minister of Transport has issued 14 free passes for life to the members of his family; the last part of the question does not, therefore, arise.

Lieut.-Colonel JAMES: Will the hon. Gentleman ascertain whether the facts are as stated?

Mr. HARMSWORTH: I do not think my hon. and gallant Friend ought to ask me to make a rather frivolous inquiry of that kind.

Mr. SWAN: In these affairs, again, would it not be better to leave it in the hands of the Egyptians to determine their policy?

Mr. HARMSWORTH: Certainly, and it is being so left.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

ADMIRALTY.

Lieut.-Commander KENWORTHY: 9.
asked the Parliamentary Secretary to the Admiralty whether he is aware of the dissatisfaction which exists as a result of the prolonged inflation of the numbers in the Civil Service staff attached to the Admiralty, especially in view of the drastic reductions in the fighting personnel; whether it is considered that there is justification for employing 2,417 more persons at the Admiralty than were so employed in the year 1914, while the total number
of ships of all kinds only exceeds the 1914 strength by 65 out of a total of 1,123; and by what date it is expected that commensurate reductions will have been made?

The CIVIL LORD of the ADMIRALTY (Commander Eyres-Monsell): The figure of 2,417 quoted by the hon. and gallant Member is incorrect; it should be 1,678 if naval officers are included, or 1,561 if civil staff only be taken. A large proportion of this increase is employed for the benefit of the fighting personnel in the distribution of prize money, medals and marriage allowance, etc. It is hoped that a large part of this work will be completed by the end of this year, and that the numbers will then he considerably reduced. In the meantime they are under continual scrutiny and reduction.

Lieut.-Commander KENWORTHY: In the meantime, may I ask how the hon. and gallant Gentleman can defend the increase of 400 per cent. or over in the case of naval constructors, who have nothing to do with marriage allowance? When will these people be reduced?

Commander EYRES-MONSELL: I have given a general answer. I think it would be better to put these matters of reduction of staff on an occasion when the subject can be debated.

Captain Viscount CURZON: Will a further reduction of staff in the Admiralty take place before the issue of clasps?

Commander EYRES-MONSELL: There is another question on the Paper with reference to that matter.

MINISTRY OF PENSIONS (.PUBLICITY BRANCH).

Colonel Sir A. HOLBROOK: 39.
asked the Minister of Pensions the names of the officials now employed in the Publicity Branch of the Ministry of Pensions and the salaries paid in each case; whether these officials are non-service men and retained on five-year contracts; and if he will explain under what circumstances such contracts were made and quote the Treasury Regulation authorising such procedure?

The PARLIAMENTARY SECRETARY to the MINISTRY of PENSIONS (Major Tryon): There are only two officials employed in the Publicity Branch at the
present time—one, who is paid a salary of £700 a year, is a non-service man, and the other, a temporary male clerk with 71s. 6d. a week, is an ex-service man. The former officer was appointed in April, 1918, and was then assured by the Minister of Pensions at the time that his appointment would not be for a shorter period than five years. This officer relinquished a post carrying pensionable rights and he possesses special qualifications for the work.

WAR OFFICE (PUBLICITY DEPARTMENT).

Major HILLS: 53.
asked the Secretary of State for War if he will give the number of officers employed in the Press or Publicity Department at the War Office; and how many of these are service men and how many non-service men?

The FINANCIAL SECRETARY to the WAR OFFICE (Lieut.-Colonel Stanley): I would refer my hon. and gallant Friend to the replies given to my hon. and gallant Friends the Members for Moss Side and Harhorough on the 19th and 27th June, respectively.

POST OFFICE (PUBLICITY DEPARTMENT).

Major HILLS: 52.
asked the Postmaster-General if he will give the number of officers employed in the Press or Publicity Department at the Post Office; and how many of these are service and how many non-service men?

The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): One such officer is employed at the Post Office; he is a non-service man.

Oral Answers to Questions — ROYAL NAVY.

BRAZILIAN CENTENARY.

Lieut.-Commander KENWORTHY: 10.
asked the Parliamentary Secretary to the Admiralty what vessels of war are at present stationed on the North American and West Indies station; what would be the extra cost of sending those vessels to Rio de Janeiro for the forthcoming exhibition; and whether this has been considered by their Lordships and with what result?

Commander EYRES-MONSELL: The force attached to the North America and
West Indies station consists of the light cruisers

"Raleigh,"
"Capetown,"
"Calcutta," and
"Constance,"

and the sloops

"Valerian" and
"Wistaria."

The estimated additional cost of sending these skips to Rio de Janeiro is £38,000 including the return voyage. As implied in my reply to the Noble and gallant Member for South Battersea (Viscount Curzon) on the 14th June, the Admiralty do not consider that these ships would constitute a squadron adequately representative of the British Empire.

Lieut.-Commander KENWORTHY: Does not the hon. and gallant Gentleman think that these four magnificent light cruisers would be better than nothing at Rio?

Sir A. SHIRLEY BENN: Does the hon. and gallant Gentleman realise that men engaged in commerce are extremely anxious that British ships should go to Rio?

Commander EYRES-MONSELL: I am quite aware of that.

Colonel ASHLEY: Could the hon. and gallant Gentleman say how long it is since the British flag has been shown in those waters?

Commander EYRES-MONSELL: I should like notice of that question.

PEMBROKE DOCKYARD.

Viscount CURZON: 12.
asked the Parliamentary Secretary to the Admiralty by how much the cost of the work carried out at Pembroke Dockyard on H.M.S. "Capetown," H.M.S. "President," and the R.F.A. "Oleander," exceeded the estimate in each case; whether, in view of the situation as disclosed by the figures and the recommendations of the Geddes Committee, the Admiralty will reconsider the decision to maintain Pembroke?

Commander EYRES-MONSELL: As far as can be ascertained, the amounts by which the cost of the work has exceeded the original estimate so far are

£


"Capetown"
…
…
148,000


"President"
…
…
18,500


"Oleander"
…
…
17,000

These excesses have been contributed to by a number of causes, including additional work ordered, changes in wages and cost of materials, delays due to strikes and more urgent work, and generally to labour conditions during the last three years. These conditions, however, affect the work of all the dockyards, and the Admiralty are of opinion that the unsatisfactory results at Pembroke must be attributed mainly to inadequate output of work by the men employed there, and have called serious attention to the necessity for improvement. The reasons for the decision of His Majesty's Government with regard to the retention of Pembroke Dockyard have been given in previous answers and statements, to which I would refer my Noble and gallant Friend.

Viscount CURZON: Is it not obvious that an extra cost of £180,000 is a very serious matter in these days, and is it not really better that the whole question of Pembroke dockyard should be reconsidered forthwith?

Commander EYRES-MONSELL: I quite agree as to the serious increase, but I have nothing to add to my answer and to my previous statements.

Lieut.-Colonel NALL: Was the decision to carry on with this work arrived at by the Admiralty or the Cabinet Secretariat?

Commander EYRES-MONSELL: It was arrived at by the Government in view of national interests.

Lieut.-Colonel NALL: Not by the Admiralty?

Commander EYRES-MONSELL: I have already said in this House that, as far as the Admiralty is concerned, we can do without it.

Mr. LAMBERT: Can the hon. and gallant Gentleman say who is responsible for supervising men who have turned out an inadequate output?

Commander EYRES-MONSELL: The Director of Dockyards under the Board of Admiralty, and we are taking fairly drastic steps in regard to that.

Sir W. JOYNSON-HICKS: Was the view of the Admiralty frankly put before the Government?

Commander EYRES-MONSELL: Yes, certainly it was, and the question has been debated in this House, and when I introduced Vote 10 the other day I gave the full national reasons. I do not believe it would pay to do away with Pembroke in the present state of unemployment.

TABLE MONEY.

Vice-Admiral Sir R. HALL: 15.
asked the Parliamentary Secretary to the Admiralty what is the total estimated saving from the reduction of table money and allowances to flag officers and commodores: and what is the maximum reduction in any one case?

Commander EYRES-MONSELL: The estimated saving consequent on the reduction of table money to pre-War rates, which takes effect from the 1st July next is as follows:


Compared with rates in force prior to the 1st April, 1922
£15,650


Compared with rates in force at present
£11,900


The corresponding maximum reductions in any one case are £821 and £639 per annum respectively.

Sir R. HALL: Is this the second reduction which has been made this year and is the figure of 800 exclusive of the reduction of 200 already effected in one particular instance?

Commander EYRES-MONSELL: On 1st July we shall be back to pre-War rates and that figure is inclusive.

Sir R. HALL: Does the total figure of a single reduction of one officer amount to nearly £1,100 this year?

Commander EYRES-MONSELL: No.

CAPITAL SHIPS (AIR ATTACKS).

Lieut.-Commander KENWORTHY: 16.
asked the Parliamentary Secretary to the Admiralty whether it is proposed to carry out experiments with the various methods of attack from the air against any of the capital ships due to be scrapped under the terms of the Washington agreement?

Commander EYRES-MONSELL: The answer is in the affirmative.

Lieut.-Commander KENWORTHY: Can we be informed of some details? How many ships are going to be experimented upon and when will it take place?

Commander EYRES-MONSELL: The experiments are being carried out on H.M.S. "Superb." These will be preceded by those on the monitor "Gordon," which does not come under the provisions of the Washington Treaty.

PRIZE MONEY.

Major Sir B. FALLE: 17.
asked the Parliamentary Secretary to the Admiralty if he is aware that the first share-out of prize money was granted in full to the estate of every rating of the Royal Navy who was killed in action; if he is aware that the second share-out of prize money is being withheld from such estates; and if he will see that this matter is put right, and the dependant of no man killed in the service of his country shall be penalised for such service?

Commander EYRES-MONSELL: The amount of naval prize money correctly payable to the legal representatives of those killed on qualifying service is the amount which the latter would have earned had they continued to serve until the Armistice. If my hon. and gallant Friend has any specific case in mind which does not seem to have been dealt with on those lines, perhaps he will let me have the particulars.

Sir B. FALLE: Am I to understand from the answer that the family of a man who was killed in the service of the country early in the War is in at least as good a position as the family of a man who passed through the fighting and is now alive, and if my hon. Friend thinks this would be only just?

Commander EYRES-MONSELL: Yes, and if there are any special cases I shall be glad to have them.

Sir B. FALLE: 56.
asked the Financial Secretary to the Treasury if he is aware of the great delay in the distribution of the second share-out of prize money; and if he can expedite the same?

Lieut.-Colonel CAMPION: 13.
asked the Parliamentary Secretary to the Admiralty whether he is aware of the delay in the distribution of naval prize money and the hardship thereby entailed; and whether he will take immediate steps to get this matter settled?

Commander EYRES-MONSELL: As stated in reply to the hon. Member for Plymouth on the 15th March last, the final
distribution of naval prize money is expected to extend over a period of at least nine months. Groups of initial letters are being opened for payment as fast as the reduced staff available admits. Consideration is given to any cases of special necessity, the hardship of which is represented to the Admiralty and justifies special payment.

Oral Answers to Questions — HOUSING LOANS (LOCAL AUTHORITIES).

Mr. T. THOMSON: 21.
asked the Minister of Health if he will state the total amount of money borrowed for the purposes of financing the various Government assisted housing schemes by local authorities; the terms on which the money has been raised, including particulars of the amounts borrowed for periods, with or without a break clause, of five years and less, also for 10, 15, 20 years, and for over 20 years; and the rates of interest payable?

The MINISTER of HEALTH (Sir Alfred Mond): I must refer the hon. Member to the very full statement furnished in reply to his question of the 22nd March. Later information for the whole country is not yet available.

Mr. THOMSON: 22.
further asked the Minister of Health whether, in view of the fall in the bank rate, he will favourably consider making loans to local authorities at a rate of interest not exceeding 3½ per cent., repayable over 60 years, to enable them without further State assistance to erect houses in those districts where serious overcrowding still continues and where there are large numbers in the building trades out of work?

Sir A. MOND: No, Sir. The terms on which the Local Loans Fund can lend depend on the price at which local loans stock can be issued, which is only indirectly affected by changes in the bank rate. The hon. Member's proposal would involve a new Government subsidy for housing.

Mr. THOMSON: Has the right hon. Baronet in mind that the Government lent to Ireland many millions of money on more favourable terms, and why should not this country have the same advantage as has been given to the sister island?

Oral Answers to Questions — POOR LAW RELIEF.

Mr. T. THOMSON: 23.
asked the Minister of Health if he is aware of the disparity existing between different provincial Poor Law areas with regard to the numbers of people receiving relief, and that whereas the numbers per 1,000 who were receiving relief on 31st December, 1921, in Liverpool, Sheffield, and Middlesbrough were 131, 122, and 109, respectively, the average number receiving relief in 34 other provincial unions was only 14 per 1,000; and, as these figures show a greater inequality of burden than exists in the London area, will he take steps whereby provincial Poor Law unions may have the advantage of relief similar to that afforded to the London unions by the equalisation of rates provisions contained in the Local Authorities (Financial Provisions) Act which the Government passed last year to assist necessitous London areas?

Sir A. MOND: I am aware of the disparity to which the hon. Member refers, and I have considered whether it would be possible to adopt some such plan as he suggests. But in view of the absence among the provincial unions of the common interest which is the basis of the Metropolitan arrangements, I doubt whether any such plan is practicable.

Mr. THOMSON: Has the right hon. Baronet considered whether a basis the same as the necessitous school area grant might not be worked out to get over the difficulties he foresees?

Sir A. MOND: I have considered that very carefully, but do not see my way to get over the difficulty.

Mr. GILBERT: 29.
asked the Minister of Health whether he will state the four boards of guardians in London who have the largest numbers of persons receiving outdoor relief at the present time; can he give the numbers in each case; will he state if any of these boards are paying above the scale of outdoor relief laid down by his Department; and, if so, which ones, and how much above the scale?

Sir A. MOND: The four boards of guardians who have the largest numbers of persons in receipt of relief are Poplar, Greenwich, Wandsworth, and Camberwell. I am sending the hon. Member a statement of the details for which he asks.

Oral Answers to Questions — COLNE VALLEY WATER ACT.

Captain WEDGWOOD BENN: 24.
asked the Minister of Health whether under the Colne Valley Water Act any preferential arrangement as to the supply of water has been given to members of the National Federation of Building Trades Employers and the London Master Builders' and Allied Industries Association?

Sir A. MOND: There is no preferential treatment given under the Colne Valley Water Bill to the associations mentioned. I am informed that during the passage of the Bill through Parliament the promoters came to an arrangement with these associations, who had petitioned against the Bill, for the supply of water for building purposes, to which they would net otherwise be entitled; but the company did not themselves come under any obligation to give a supply to members of the associations on any better terms than to anybody else.

Oral Answers to Questions — BOROUGH EXTENSION.

Mr. TURTON: 25.
asked the Minister of Health what action he proposes to take with reference to the Doncaster Provisional Order, having regard to his decision to advise the setting up of a Royal Commission to consider the question of borough extensions in the counties and the constitution of county boroughs?

Sir A. MOND: The proposed appointment of a Royal Commission was not intended to prejudice cases now under consideration, and as I understand that the town council are anxious to proceed with this Bill, which has now passed through Committee, I think that the question of its further progress should be left to the decision of the House.

Mr. TURTON: When the right hon. Baronet announced the decision of the Government to set up a Royal Commission, did he not state that in the interval we must call a halt, and did he not at the same time give notice that no contentious proposals for the creation of county boroughs would be entertained by the Ministry, and is he not aware that this is a very contentious proposal, and will he explain his illogical and contradictory answer?

Sir A. MOND: My answer was neither illogical nor contradictory. I said the
Ministry will not accept, till the Royal Commission has reported, any more contentious business. This Bill has passed from the purview of the Ministry. What I intended to safeguard was application being made to the Ministry for further Provisional Orders. I never intended that a Bill which this House has accepted on Second Reading and in Committee should be subsequently withdrawn without the House having an opportunity of dealing with it rather than myself.

Oral Answers to Questions — RENT RESTRICTIONS ACT.

Sir WALTER de FRECE: 28.
asked the Minister of Health if he will consider the desirability of calling a conference representative of both landlords and tenants to consider an agreed-on policy at the expiration of the Rent Restrictions Act, it being understood that the Government would give such policy the force of law?

Sir A. MOND: I am afraid that it would be difficult to convene such a conference, and that even if it were convened it would not be likely to arrive at any agreement., but if my hon. Friend can make any suggestions for arriving at the desired result I shall be happy to consider them.

Oral Answers to Questions — UNEMPLOYMENT.

STATISTICS (LONDON).

Mr. GILBERT: 20.
asked the Minister of Labour whether he can make any statement as to unemployment in London at the present time; whether there has been a general decrease for men, women, and young persons leaving school during the last few months; and how do the present figures of unemployed in London compare with the highest figures he has recorded?

The MINISTER of LABOUR (Dr. Macnamara): There has been a continuous improvement in employment in the Greater London area during recent months. The percentage unemployed in insured trades on 22nd May, 1922, in the Greater London area was 10.6, as compared with 12.1 at the end of last January, and 13.2 on 27th May, 1921, when unemployment was at its highest point. On 19th June, 1922, there were on the live
registers of Employment Exchanges in this area 156,775 men, 30,007 women, and 11,022 boys and girls; compared with 183,036 men, 81,193 women, and 28,382 boys and girls on 27th May, 1921.

Sir ALFRED YEO: Has the right hon. Gentleman seen the statement in the papers by the Mayor of Poplar that two yards have made application for unemployed, as they have work waiting to be done, and they cannot get the men in consequence of the treatment they are receiving at the hands of the guardians?

Dr. MACNAMARA: No.

Sir A. YEO: I will fetch it.

Mr. MORGAN JONES: Will the right hon. Gentleman inquire as to the accuracy of the statement?

Mr. HURD: In view of the enormous demand for domestic servants, is the right hon. Gentleman satisfied that there are 30,000 unemployed?

Sir A. YEO: left the Chamber, and returned with a copy of a newspaper, which he handed to Dr. Macnamara.

GLOVE WORKERS.

Mr. HOGGE: 18.
asked the Minister of Labour if he can state the number of glove workers who were totally or partially unemployed during the first week in May?

Dr. MACNAMARA: On 24th April, the nearest date for which particulars are available, there were 470 glove workers registered at Employment Exchanges in Great Britain as wholly unemployed, and 407 as working systematic short time.

Oral Answers to Questions — IRELAND.

GUN-RUNNING.

Sir W. de FRECE: 30.
asked the Chief Secretary for Ireland whether he can state the extent to which gun-running from abroad is now being carried on in Irish waters; how many ships are known to have landed cargoes; how many have been detected; and what is the general policy of the Government in the matter?

The SECRETARY of STATE for the COLONIES (Mr. Churchill): I have no reason to suppose that gun-running from abroad is being carried on in Irish waters to any appreciable
extent; nor so far as I am aware, has any ship successfully attempted to land a cargo of arms. One vessel carrying ammunition has been intercepted and her cargo confiscated. A second suspected vessel was also intercepted, but no arms were found on hoard her. In reply to the last part of the question, I can assure the hon. Member that the policy of His Majesty's Government has been, and will continue to be, to prevent by all possible means the acquisition of munitions of war by persons or parties known to be acting in defiance of lawful authority.

Lieut.-Colonel NALL: Is it a fact that factories have already been set up for the manufacture of ammunition, and what steps are being taken to prevent necessary materials being landed for that purpose?

Mr. CHURCHILL: The Provisional Government are within their rights in setting up factories for the manufacture of munitions if they find it necessary, or to apply to us or to make contracts abroad.

Mr. GWYNNE: Is the right hon. Gentleman in a position to get accurate information as to whether or not arms are landed in Ireland?

Mr. CHURCHILL: I do not know. I cannot say; but we have intercepted several cargoes which were ordered for people who were opposed to the Provisional Government. The Provisional Government can import arms. They have only to ask for arms and they will be supplied with them.

Mr. A. HOPKINSON: Will the right hon. Gentleman say what right the British Government has to interfere with the importation of arms either by the Free State Government or by the Free State Government's opponents?

Mr. CHURCHILL: That is reducing the whole thing to an absurdity.

Colonel ASHLEY: Would the right hon. Gentleman interfere with a citizen of Canada who was importing arms?

Mr. CHURCHILL: It is very difficult to know from a question like that what is the position of the hon. and gallant Member in these matters. We are passing
through a very difficult time, which is not comparable to any existing situation in any of our great Dominions. The Provisional Government is in a period of transition, and very exceptional and anomalous procedure is involved in that period.

Lieut.-Colonel NALL: Is the House to understand that the Free State Government will be furnished with further supplies of arms if they ask for them?

Mr. CHURCHILL: If in my judgment, and with the approval of my colleagues, that course is thought necessary and proper, certainly.

MILITARY FORCE, SOUTHERN IRELAND.

Sir W. de FRECE: 32.
asked the Secretary of State for the Colonies whether he can inform the House of the existence of any obstacles in the way of the Irish Provisional Government raising an adequate force to maintain law and order, from the absence of which so many British subjects are suffering; and whether, in that case, these obstacles are in any way due to causes whose removal this country might facilitate?

Mr. CHURCHILL: I am not aware of any material obstacles preventing the achievement of the desirable end indicated by the hon. Member; but there have been obvious political difficulties, which still exist, although I am glad to think that they are now far less formidable than before the recent elections. I know of no way in which His Majesty's Government can assist at present in the removal of these difficulties otherwise than by a consistent fulfilment of the policy which has been fully explained to the House.

ATTACK ON INSURGENTS, DUBLIN.

Colonel ASHLEY: (by Private Notice) asked the Secretary of State for the Colonies whether he could give the House any account of the happenings in Dublin during the last 24 hours?

Mr. CHURCHILL: This morning at dawn the forces of the Provisional Government attacked the insurgent bands occupying the Four Courts in Dublin. This decision in no way arose out of the Debate in this House, nor in consequence of the declaration of His Majesty's Government to Parliament. It arose as the result of further aggressive anarchic
action by Mr. Rory O'Connor's insurgents, culminating in the forcible seizure of one of the principal officers of the Irish Army.
I can add little to the information which has already been published by the Press on the course of the fighting. The Provisional Government are solely responsible for the operations, and they have so far made me no communication on the subject. They have declined all assistance from the Imperial forces, except so far as equipment is concerned.
The fighting is still in progress, and I have no trustworthy information as to casualties. The Four Courts appears to be a position of considerable structural strength, and no definite result has yet been achieved.

Colonel ASHLEY: What orders, if any, have been given to the Imperial troops?

Mr. CHURCHILL: What instructions would my hon. and gallant Friend suggest?

Colonel ASHLEY: It is not for me to make suggestions. I merely asked a simple question.

Oral Answers to Questions — PALESTINE (MR. ABRAMSON).

Sir W. JOYNSON-HICKS: 31.
asked the Secretary of State for the Colonies whether it is proposed to appoint Mr. Abramson to a post in Palestine; if so, will he say what his name was before it became Abramson; and what his nationality was before it became British?

Mr. CHURCHILL: With regard to the first part of the question, Mr. Abramson has been holding a post under the Palestine Administration for the last two years, and it is proposed to retain his services. I have no information in regard to the second and third parts, and am not aware that there is any ground for the insinuations that they contain. Mr. Abramson has served the British Government with great credit both during and since the War.

Sir W. JOYNSON-HICKS: Has the Colonial Office no information as to the latter part of the question, whether this gentleman is not an English-born subject, and whether there are not hundreds of retired officers, who fought during the War for us, who could have been appointed to this Governor's berth,
rather than seeking a gentleman who was not. British born, but who was born a subject of one of the enemy countries?

Mr. CHURCHILL: We are at the present moment administering one of the former enemy countries, and it is natural that persons who have been resident in those countries and are deeply acquainted with all their affairs should be able to be of use and service. Mr. Abramson held a commission in the British forces and rendered valuable services during the whole process of the reconquering and reconquest of Palestine, and he is from every point of view a most reputable and competent man.

Mr. ORMSBY-GORE: Is it not a face that Mr Abramson is by faith a Christian?

Mr. CHURCHILL: Yes.

Mr. ORMSBY-GORE: And not by faith a Jew. Will the right hon. Gentleman put a stop to these insinuations which suggest that, while a Jew may be employed in the British Civil Service in this country, or anywhere else, he may not be employed in Palestine: which is the policy of the anti-Semitic party led by the hon. Member?

Oral Answers to Questions — NAVY, ARMY, AND AIR FORCE INSTITUTES.

Sir W. JOYNSON-HICKS: 33.
asked the Secretary of State for Air if he is aware of the system whereby the Navy, Army, and Air Force Institutes supply goods in their shops at ordinary retail prices, less 8 per cent., and at the same time make a profit on the rations supplied to the men; if he is aware that profits as high as 50 and 75 per cent. are made in the wet and dry canteens, respectively; and if he will do anything to alter, for the benefit of the men, this method of privileged trading?

The SECRETARY of STATE for AIR (Captain Guest): As the reply is rather long, I will, with my hon. Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the reply:
The shops to which my hon. Friend refers are presumably the service institutes conducted by the Navy, Army and
Air Force Institutes. These institutes are an integral part of the organisation of every Air Force station at home.
The practice of paying rebates on the gross takings in such institutions has been in force for a great many years, and was instituted long prior to the formation of the Navy, Army and Air Force Institutes. Moneys received by way of such rebate are spent for the collective benefit of the men by the commanding officer of the unit or station. The suggestion implied in my hon. Friend's question that the 8 per cent. rebate is paid out of profits made on the sale of the articles for the commuted portion of the ration is entirely without foundation; the retail price of these articles is fixed on a basis which ensures that it shall not be more than the cost of the same articles if supplied by the Royal Army Service Corps.
I am advised that the percentage of profits in the wet and dry canteens, as quoted by my hon. Friend, are incorrect and exaggerated, and that while gross profits on certain lines, such as cups of tea and coffee, are undoubtedly high, the prices charged in service institutes do not admit of more than a low margin on the profits as a whole.
Such profits as may accrue eventually from trading in institutes, after necessary expenses have been met, would, in any event, be spent for the benefit of the men of the Services under the direction of the Board of Admiralty, the Army Council, and the Air Council.
The present system under which institutes of the Navy, Army and Air Force are conducted by the Navy, Army and Air Force Institutes was adopted after full consideration of the matter by a joint conference of the three Services, and I am satisfied that it is at the present time the best possible system from the point of view of the Royal Air Force and of the men themselves, who are represented on the local committee of management, and I do not propose to alter it.

Oral Answers to Questions — WIRELESS TELEPHONY (WEATHER BULLETIN).

Mr. MALONE: 34.
asked the Minister of Agriculture whether he is aware of the extent to which wireless telephony is being utilised in France to assist agriculture by broadcasting a weather bulletin
twice daily from the national meteorological office; and whether any similar schemes are in contemplation for this country?

Captain GUEST: I have been asked to answer this question. Pending the result of inquiries which are being made, I have no information, other than that which has appeared in the Press, as to the French arrangements for issuing weather forecasts to agriculturists by wireless telephony. The feasibility of using wireless telephony for this purpose in this country is at present under consideration. I may say, however, that the Air Ministry issues daily by means of wireless telegraphy a number of weather reports which could be of considerable use to agriculturists, and with a view to meeting the case of agriculturists and others possessing, or about to instal, wireless receiving apparatus, a pamphlet giving particulars regarding these messages and instructions as to their reception and utilisation has been prepared and will he issued in the course of a few days. In addition, the pre-War arrangement by which afternoon forecasts were issued during the harvest season was extended two years ago, so as to enable a farmer, on payment of the cost of telegraphing, to obtain a special forecast at any time which suited his individual need.

Oral Answers to Questions — ST. JAMES'S PARK (LAKE BUILDINGS).

Mr. GILBERT: 36.
asked the hon. Member for the Pollok Division of Glasgow, as representing the First Commissioner of Works, whether he can explain the delay in clearing the lake buildings in St. James's Park and re-establishing the lake; whether he can now give a definite date when the work will be completed; and if it will be during the present summer months?

Lieut.-Colonel Sir J. GILMOUR (for the First Commissioner of Works): As regards the clearance of the buildings, I would refer the hon. Member to my reply to a similar question on the 15th instant by the hon. Member for Ashton-under-Lyne. As regards the re-establishment of the lake, I very much regret to say that preliminary experiments show that the fissures in the concrete bed are deeper
and more numerous than was expected. This raises a very serious financial problem, and though no estimates of reparation have been prepared, I imagine that the cost would be serious, and under present conditions it may prove necessary to confine the work of repair to a small portion of the lake.

Oral Answers to Questions — DYESTUFFS.

Captain BAGLEY: 38.
asked the President of the Board of Trade whether he has any information which would indicate that critics of the British Dyestuffs Act have been in consultation or negotiation with representatives of German dyestuffs interests with a view to devising means of securing the modification or repeal of the British Dyestuffs Act?

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Sir W. Mitchell-Thomson): No doubt persons interested in the importation of German dyestuffs into this country have endeavoured to obtain from German makers price quotations which can be adduced as arguments for the modification of the Act, but I have no reason to think that this has been done to any great extent.

Oral Answers to Questions — NAVAL AND MILITARY PENSIONS AND GRANTS.

DIABETES AND TUBERCULOSIS (DIET).

Mr. NAYLOR: 40.
asked the Minister of Pensions whether, bearing in mind the need for special diet in cases of diabetes and tuberculosis, he will reconsider and revise the terms of Circular 2097, whereby special diet is to be disallowed in certain cases, and revert to the system hitherto in operation?

Major TRYON: I would refer ray hon. Friend to the answer given on the 26th June to the hon. Member for Burslem in reply to a similar question, of which I am sending him a copy.

WIDOWS' PENSIONS.

Mr. NAYLOR: 41.
asked the Minister of Pensions whether he will give consideration to the terms of Article 11 of the Royal Warrant whereby the eligibility of a widow to be granted a pension is, among other conditions, that the soldier's
death must occur within seven years of receiving a wound or injuries, with a view to cancelling this provision of the Article?

Major TRYON: I would refer my hon. Friend to the answer given to the hon. and gallant Member for Wandsworth Central, on the 13th June, of which I am sending him a copy.

Oral Answers to Questions — INDIA.

ARMY OFFICERS (DISCHARGE AND COMPENSATION).

Sir A. HOLBROOK: 42.
asked the Under-Secretary of State for India the number of captains and subalterns whom it is proposed to discharge from the Indian Army; what procedure is being adopted in the selection for discharge, and what compensation it is proposed to pay to officers of both ranks; and whether consideration will be given in special cases of hardship involved, particularly in the cases of young officers trained at Sandhurst, who have made the Army their career and have had no training for civil employment?

The UNDER-SECRETARY of STATE for INDIA (Earl Winterton): The number of surplus officers will be about 2,400, but is not yet finally determined. I am sending my hon. and gallant Friend a copy of the Regulations governing compensation. The selection is wholly in the hands of the military authorities in India, who will give as much consideration to personal circumstances as is consistent with the paramount interests of the Service and with justice to all parties.

Mr. HOWARD GRITTEN: Is it a fact that many of these officers who are excess served throughout the whole War?

Earl WINTERTON: That may be, but that does not affect the point that consideration is being given, so that the minimum of hardship will be caused, and the best officers can be retained.

MURDER OF S. P. EATON (COMPENSATION).

Lieut.-Colonel FREMANTLE: 43.
asked the Under-Secretary of State for India if he is aware that the late Mr. Stanley Patrick Eaton, manager of the rubber
plantation of the Pullangode Rubber Company at Manjeri, was murdered by the Moplahs during the Mappilla rising of 1921; that he had been assured by the collector of the Calicut district that it was quite safe for him to return to his estate; that the said Stanley Patrick Eaton was the sole support of his parents, Mr. and Mrs. John Netterville Albert Eaton, of Belcarres, Serpentine Avenue, Ballsbridge, Dublin; that the said John Nettcrville Albert Eaton was from 1883 to 1896 an engineer under the Public Works Department of India, from which he was retired without pension, but with a compassionate gratuity of £250, owing to chronic dysentery contracted during his public service in India from complications of which he is still incapacitated; that the said J. N. A. Eaton has applied to the Government of Madras for compensation for the loss of his son and only means of support, and has received a reply from the Chief Secretary of the Government of Madras to the effect that the Government can accept no responsibility for loss of life caused during the Mappilla rebellion; if he is aware, however, that they granted compensation to the widow of the late Stanley Patrick Eaton; and if he will have the parents' claim reconsidered, having regard to their present almost destitute condition, and the father's past services for the Empire and his disability caused thereby?

Earl WINTERTON: I am aware of most of the circumstances stated in the hon and gallant Member's question, but I did not know that the request of the late Mr. Eaton's widow for compensation had already been met, or that the request of his father had been refused. I will send a copy of the question to the Madras Government for their consideration, but my Noble Friend does not feel that he could dictate to the local Government as to the manner in which they should deal with the very numerous applications from sufferers from the recent disturbances in Malabar.

Oral Answers to Questions — MURDER OF SIR HENRY WILSON.

Major Sir KEITH FRASER: 45.
asked the Prime Minister whether O'Brien or Connolly, The murderers of the late Field-Marshal Sir Henry Wilson, were released
from prison in England or Scotland under the Treaty arrangements with the Sinn Fein Provisional Government?

The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Shortt): I have been asked to reply. As this question has been put down, and failure to reply might create prejudice, I will depart from the usual procedure in regard to matters which are the subject of judicial proceedings, and reply to it. The answer is in the negative.
I would, however, beg hon. Members, while the case is sub judice, to refrain from putting questions of this kind, which are calculated to be prejudicial to persons awaiting trial. All the relevant facts will be disclosed at the proper time.

Sir H. NIELD: 35.
asked the hon. Member for the Pollok Division of Glasgow, as representing the First Commissioner of Works, if he will state who is responsible for keeping the national flag flying at topmast on the public buildings, e.g., the Tower of London, the Customs House, and other State-owned buildings during the time when the public funeral of the late Field-Marshal Sir Henry Wilson was in progress; and whether he is aware that keen resentment has in consequence been aroused, to allay which, will he make careful inquiry into the circumstances, and give such directions as he may deem necessary?

Sir J. GILMOUR: My Department is responsible for issuing instructions as regards flags on public buildings. Flags were not generally flown on public offices, but the War Office flew the flag half mast. The Admiralty flag is never lowered, even on the death of the Sovereign, but the White Ensign was flown on the Mall Arch at half mast as a mark of respect to the late Field-Marshal. The Tower, being a fortress, is under the jurisdiction of the Constable. The Custom House flies its own flag, like the Admiralty, and it is much regretted that through a misunderstanding this flag was not dropped. Instructions were given for the flag on the Houses of Parliament to tie flown at half mast during the funeral ceremony.

Mr. R. McNEILL: Has the hon. Gentleman received any explanation from the Constable of the Tower for the want of respect shown there?

Sir J. GILMOUR: No. My Department has no jurisdiction over that matter.

Sir M. DOCKRELL: May I ask you, Mr. Speaker, whether it was with your concurrence and approval that the notice appeared on Monday morning, the day of the funeral, stating that only those ticket-holders, Members of this House and others, who happened to possess near them Court suits or uniforms could attend the funeral?

Mr. SPEAKER: That is a matter which does not come within my jurisdiction at all.

Sir M. DOCKRELL: I was one of those most anxious to pay my respects to the memory of the late Field-Marshal, but I was precluded from doing so. Although I have outgrown my Court suit, I have a uniform, but not here.

Oral Answers to Questions — HAGUE CONFERENCE.

Lieut.-Colonel A. MURRAY: 46.
asked the Prime Minister if he can give the House any information with regard to the proceedings at the Hague Conference?

Mr. HARMSWORTH: The meetings of the non-Russian Commission have been occupied with arranging the procedure for the work of the Conference. Three Sub-commissions have been formed, for debts, property and credits. Complete unanimity has been attained among the representatives of the Powers attending.

Lieut.-Colonel MURRAY: Has the question of credits been discussed between the British and the Russian delegates, and what instructions have been given to the British delegates in reference to that matter?

Mr. HARMSWORTH: The Russian delegates only arrived at The Hague the day before yesterday. I am not in a position to answer the question at the moment.

Lieut.-Colonel MURRAY: What are the instructions of the British delegates with regard to that matter?

Mr. HARMSWORTH: I dare say that I can give them if the hon. and gallant Member will give me notice.

Oral Answers to Questions — COAL INDUSTRY.

PRICES (REDUCTION).

Sir R. CLOUGH: 48.
asked the Secretary for Mines whether the reduction of 9s. per ton in London in the prices of the best house coal is also being proportionately introduced in the prices of coal in the provincial districts; and, if not, why, when there is such a reduction in the prices of coal, the benefits cannot be extended to all classes of the community irrespective of residence?

The SECRETARY for MINES (Mr. Bridgeman): I believe that there is a tendency for the retail price of coal to fall in the provinces as well as in London, but I have not the information to enable me to give a categorical answer to the hon. Member's question. As regards the last part of the question I would remind the hon. Member that the price of coal depends upon factors which are not uniform throughout the country, and over which the Government have no control.

PRODUCTION (COST).

Mr. CAIRNS: 49.
asked the Secretary for Mines if he is aware that coal is selling in London at 40s. per ton; can he say what the coal-getter at the coalface gets per ton; what is charged for royalty, rent, and wayleaves per ton; what for plant per ton and carriage or freights per ton: and what coal merchants got per ton for delivery in London?

Mr. BRIDGEMAN: I understand that the cheaper qualities of house coal are now selling in London at rather less than 405. a ton, but I am not in a position to give, an analysis of the production costs of particular classes of coal. With regard to distribution costs I would refer the hon. Member to the reply given to the hon. Member for Keighley on the 29th May.

MINERS' WAGES.

Mr. CAIRNS: 50.
asked the Secretary for Mines if he is aware that miners' wages are only 20 per cent. above 1914 wages, or one-fifth; that the cost of living is 80 per cent., or four-fifths, above 1914 prices; that miners' wages depend on the selling price of coal less the expenses of the trade: and that this means a further reduction of miners'
wages; and will he say what course the Government intend to take to meet the cases of such reductions?

Mr. BRIDGEMAN: On the first two parts of the question I would refer the hon. Member to the answer given on the 26th June to the hon. and gallant Member for Farnworth, and on the last part to the answer given on the 27th June to the hon. Member for Abertillery. A reduction in the pithead price of coal does not necessarily mean a reduction in the men's weekly earnings. Apart from the fact that many miners are now, unfortunately, on the guaranteed minimum, it is possible that a reduction in price may lead to increased trade, and so to more regular working and a reduction in cost per ton.

Mr. CAIRNS: Is the right hon. Gentleman aware that the children of these miners are not getting enough food, and will he call on the nation that has to pay in the future through the weakness of its men and its women to take action?

Mr. PENRY WILLIAMS: Will the right hon. Gentleman have some inquiry made as to how it is that the miners cannot get a sufficient wage, the owners cannot earn a profit, and yet the price of coal is so high that industries cannot he re-established?

Mr. BRIDGEMAN: I cannot agree as to an inquiry. I regret very much what the hon. Member has told me, but I have no power to grant any money.

Mr. CAIRNS: Is this the reward for those left behind by the men who laid down their lives on the battlefield?

Oral Answers to Questions — POST OFFICE (RECEIPTS).

Mr. NAYLOR: 51.
asked the Postmaster-General what is the increase in Post Office receipts for the period from 1st April to 17th June, compared with the corresponding period of last year; and what proportion of that increase is derived from the postal carrying service, telephones, and telegraphs, respectively?

Mr. PEASE: The payments into the Exchequer between the 1st April and the 17th June, 1922, were £2,000,000 in excess of the payments during the corresponding period in 1921. This increase is accounted for almost entirely
by the telephone receipts, which were abnormally low in the early months of 1921–22 owing to the introduction of the system of deferred payments under the new tariff.

Oral Answers to Questions — FORESTRY COMMISSION (ANNUAL REPORT).

Lieut.-Colonel MURRAY: 57.
asked the hon. Member for Monmouth, as representing the Forestry Commissioners, if he can say when the Annual Report of the Forestry Commission will be published?

Mr. L. FORESTIER-WALKER (for the Forestry Commission): The Second Annual Report of the Forestry Commissioners will be published early in July.

Oral Answers to Questions — WOMEN POLICE PATROLS.

Viscountess ASTOR: 60.
asked the Secretary of State for the Home Department whether, in view of the fact that he has stated that the Metropolitan police women patrols will be reduced and not disbanded, he will state how many he proposes to retain and in what capacities and for what duties?

Mr. SHORTT: I cannot give a definite answer as yet, but up to the present it has been arranged that three women patrols should be retained for the purpose of taking statements from women and girls.

Viscountess ASTOR: Is it not a fact that the three women who have been offered the post have refused it, because they realised that it was only camouflage?

Mr. SHORTT: I do not think that that is so. I understand from the Commissioner that they have accepted it.

Viscountess ASTOR: I think that you have understood incorrectly.

Viscountess ASTOR: 61.
asked the Home Secretary when he proposes to institute the inquiry into the work of the Metropolitan police women patrols?

Mr. SHORTT: I am not aware that there is any necessity for further inquiry at the present time.

Viscountess ASTOR: Did you not say that you were going to have some inquiries made?

Mr. SHORTT: I do not think so. I have no recollection of saying any such thing.

Viscountess ASTOR: Well, one of you said it.

Oral Answers to Questions — PALACE OF WESTMINSTER (NIGHT GUARDIANSHIP).

Mr. S. ROBINSON: 62.
asked the Home Secretary if the night guardianship of the Palace of Westminster is to be taken from the police and entrusted to a body of amateur constables; and, if so, whether, owing to the lack of intimate knowledge of these men that must prevail, he will say why this policy has been adopted?

Sir J. GILMOUR: In the interests of economy, the police who have been employed on night watching duties at the Houses of Parliament are to be substituted by night watchmen. I need hardly add that the men in question have been selected with the greatest care.

Mr. ROBINSON: In view of recent happenings, is not that a rather dangerous thing to do at the present time, when these buildings and the rooms of Ministers should be guarded by police the whole time?

Sir J. GILMOUR: No, I do not think so. We are only carrying out what is the custom in every other Government Department in the country.

Oral Answers to Questions — RUSSIA (MRS. STAN HARDING).

Sir W. DAVISON: 3.
asked the Under-Secretary of State for Foreign Affairs if he will inform the House what is the exact position in which the claim of Mrs. Stan Harding against the Russian Soviet Government for compensation in respect of illegal imprisonment and theft on arrival in Russia with a safe conduct from the Soviet authorities, which was supported by a special despatch from the British Secretary of State for Foreign Affairs, now stands?

Mr. HARMSWORTH: Mrs. Stan Harding's claim will be put forward together with the claims of other British subjects if and when the negotiations with the Soviet Government at The Hague reach the stage at which such action can be taken.

Sir W. DAVISON: Is the hon. Member aware that this claim was put forward at the Genoa Conference, and that an express demand was made many months ago by the Foreign Secretary, and is it not unfair to this unfortunate lady that her claim should not be met while trading agreements are being negotiated? Should not a matter of this kind, involving the liberty of a British subject who was, admittedly, under a safe conduct which has been infringed, take precedence of a trading arrangement?

Mr. HARMSWORTH: It is a matter of importance, but my hon. Friend does not realise that there is a great number of other cases.

Mr. R. McNEILL: Is there any precedent, for referring a case of insult and injury to a British subject to w economic conference?

Oral Answers to Questions — MORMONS.

Colonel WEDGWOOD: asked the Home Secretary whether he has received any report as to the tarring and feathering of three Mormons; whether any arrests have taken place; and, if not, whether any steps are being taken to put a stop to the recurrence of such incidents?

Mr. SHORTT: I have not received any report as to such an incident. The police are ordinarily able to prevent the occurrence of such outrages in this country, but no police system could preclude altogether the possibility of their occurrence.

Lieut.-Commander KENWORTHY: Does that answer mean that the police are not going to do all they can to protect all persons in this country, even if they are Mormons?

Mr. SHORTT: No; it means what it says.

Viscount CURZON: Is it not a fact that this case occurred in Scotland?

Mr. SHORTT: Yes.

Oral Answers to Questions — CONVICT CONMY (DISCIPLINARY SENTENCE).

Colonel WEDGWOOD: 59.
asked the Home Secretary whether the disciplinary sentence upon Convict Conmy, living in
chains for six months for having broken prison, can be reviewed in consideration of the severity of the punishment?

Mr. SHORTT: An order was given by a Director of Convict. Prisons that Conmy should be restrained by chains weighing about seven pounds fastened round his ankles and to a belt round his waist. It is done as a precaution against escape. The question of abolishing the system is under consideration. I am in consultation with the Prison Commissioners as to the immediate removal of the restraint from Conmy. No other prisoner is so restrained.

Mr. FOOT: Apart from the intervention of the right hon. Gentleman, how long would such punishment continue? Is it true that such punishment was to continue in this case for six months?

Mr. SHORTT: Not necessarily. The Regulation permits its continuance for six months, but I am informed that it is very rarely continued for anything approaching that time.

BILLS PRESENTED.

SALE OF BREAD BILL,

"to provide for the better protection of the public in relation to the sale of bread," presented by Mr. BALDWIN; supported by Mr. Munro and Sir William Mitchell-Thomson; to be read a Second time upon Monday next, and to he printed. [Bill 165.]

BRITISH EMPIRE EXHIBITION (AMENDMENT) BILL,

"to remove doubts as to the powers of the Board of Trade under the British Empire Exhibition (Guarantee) Act, 7920," presented by Mr. BALDWIN; supported by Sir Philip Lloyd-Greame and Sir William Mitchell-Thomson; to be read a. Second time upon Monday next, and to he printed. [Bill 166.]

PHARMACY BILL,

"to regularise the position of all persons trading as chemists and druggists or pharmacy store proprietors in the sale of drugs, the dispensing of doctors' prescriptions, and the sale of patent medicines," presented by Captain O'GRADY; supported by Lieut.-Colonel Watts-Morgan, Mr. Casey, Mr. Tillett, and Mr.
John Jones; to be read a Second time upon Monday next, and to be printed. Bill 169.]

BILLS REPORTED.

Hampshire Rivers Fisheries Provisional Order Bill,

Reported, with Amendments [Provisional Order confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered To morrow.

Marriages Provisional Order (No. 2) Bill,

Reported, with an Amendment [Provisional Order confirmed]: Report to lie upon the Table.

Bill, as amended, to be considered Tomorrow.

Ministry of Health Provisional Orders (No. 8) Bill,

Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.

Bill, as amended, to he considered Tomorrow.

Ministry of Health Provisional Orders (No. 9) Bill,

Reported, with Amendments [Provisional Orders confirmed]: Report to lie upon the Table.

Bill, as amended, to be considered Tomorrow.

Ministry of Health Provisional Orders (No. 10) Bill,

Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered Tomorrow.

Ministry of Health Provisional Order (Guildford Extension) Bill [Lords],

Reported, with Amendments [Provisional Order confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered To-morrow.

Pier and Harbour Provisional Orders (No. 1) Bill,

Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered To-morrow.

Pilotage Provisional Orders (No. 4) Bill,

Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.

Bill, as amended, to be considered To-morrow.

Croydon Gas Bill [Lords],

Reported, with Amendments; Report to lie upon the Table.

Dartmouth Harbour Commissioners (Reconstitution) Bill [Lords],

Great Northern Railway Bill [Lords],

Shepton Mallet Waterworks Bill [Lords],

Torquay Corporation (Electricity) Bill [Lords],

Reported, with Amendments; Reports to lie upon the Table, and to be printed.

CELLULOID AND CINEMATOGRAPH FILM BILL [Lords].

Read the First time; to be read a Second time To-morrow, and to he printed. [Bill 168.]

MESSAGE FROM THE LORDS.

That they have agreed to,

Oxford and St. Albans Wine Privileges (Abolition) Bill,

Caledonian Railway Order Confirmation Bill, without Amendment.

Worthing Corporation Bill, with Amendments.

That they have passed a Bill, intituled, "An Act to make provision against the discharge or escape of oil into navigable waters."[Oil in Navigable Waters Bill [Lords.]

And also, a Bill, intituled, "An Act to confirm a Provisional Order under the Private Legislation Procedure (Scot- land) Act, 1899, relating to Dumfries and Maxwelltown Waterworks." [Dumfries and Maxwelltown Waterworks Order Confirmation Bill [Lords.]

That they disagree with the Amendment to the Gaming Bill [Lords], for which disagreement they assign a Reason.

OIL IN NAVIGABLE WATERS BILL [Lords].

Read the First time; to be read a Second time To-morrow, and to be printed. [Bill 167.]

DUMFRIES AND MAXWELLTOWN WATERWORKS ORDER CONFIRMATION BILL [Lords].

Ordered (under Section 7 of the Private Legislation Procedure (Scotland) Act, 1899) to be considered To-morrow.

GAMING BILL [Lords].

Lords Reason to be considered upon Friday, and to be printed. [Bill 170.]

SELECTION (STANDING COMMITTEES).

STANDING COMMITTEE B.

Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Member from Standing Committee B: Mr. Carr; and had appointed in substitution (during the consideration of the Summer Time Bill [Lords]): Mr. Townley.

STANDING COMMITTEE C.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C (added in respect of the Allotments Bill [Lords]): Mr. Banton; and had appointed in substitution: Mr. Mills.

Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C (during the consideration of the Electricity (Supply) Bill [Lords] and the Allotments Bill [Lords]): Mr. Holmes; and had appointed in substitution: Mr.Trevelyan Thomson.

Reports to lie upon the Table.

Orders of the Day — FINANCE BILL.

Considered in Committee [Fifth Day].

[Mr. JAMES HOPE in the Chair.]

NEW CLAUSE.—(Exemption of income of person casually employed.)

"Notwithstanding anything in the Income Tax Acts, the income of a wage-earner who is casually employed by the hour or less period and who is not in the regular employment of one employer shall be exempt from Income Tax."—[Mr. Hayday.]

Brought up, and read the First time.

Mr. HAYDAY: I beg to move, "That the Clause be read a Second time."
There is in industry quite a large number of casually employed workers. They abound mostly round the dock and wharf areas and in seasonal industries. These men, in common with other industrial workers, are subject to quarterly assessments for the purpose of Income Tax. They are, perhaps, employed during one quarter of the year for about two or three weeks in that quarter, and during those two or three weeks, they may have half-a-dozen different employers. That quarter, when it comes under review, is not subject to any Income Tax demand. The next quarter may find the casual worker more successful; he may be employed almost the whole time by about 20 different employers. That quarter's income comes under review and it might well reach a total that makes Income Tax payable for the quarter. The position is this: The casual worker has had one quarter with very little income. There has been an accumulation of debts; perhaps arrears of rent have accrued. The keeper of the little corner shop has made certain advances in the hope that more regular employment will be obtained by this particular casual worker. The second quarter being the one which would bring the worker under review for Income Tax, he has first to fulfil the obligations left over from the bad quarter, by meeting his debts and arreas of rent. [Interruption.] If hon. Members listen, they will see that I am merely trying to present the different state of circumstances prevailing in the case of a casual worker; to point out the distinction between the casual worker and the
person in receipt of a regular annual income. After he has met these arrears the third quarter comes along, and with it the demand for Income Tax based on the second quarter. Hon. Members of the Committee have got to appreciate that fact—the demand comes in the third quarter following on the ascertainment of the second quarter's earnings, the assessment being on the quarterly income. In the third quarter the man may, unfortunately, through the seasonal nature of his occupation, or a lessening of employment at the docks, find himself facing another bad period as regards income. He may be unable to meet the demand, and as a result, he is threatened with being brought before the justices. He may, eventually, be brought before the justices; he may demonstrate to them that he cannot pay, and they will inform him that there is an Act of Parliament which says he must pay, and if he does not pay he must go to prison. We consider that to be a definite hardship.
The Chancellor of the Exchequer may say that, although the man has difficulty in meeting the demand for the good quarter, he can at the end of the year review the whole of his annual income and can make a claim if, on the annual basis, he is entitled to do so. Those who have had correspondence on the subject of the rectification of Income Tax demands know very well that the casually employed men with his slender income, with his secondary social status, will get secondary consideration. Much time and trouble will be required before he can satisfy men working by rule, on strict regulations, that he has a right to be relieved of the demand or have any sum returned to him. Yet this money may have to be paid by him at the risk of going another few weeks in arrears with his rent. He is between two stools. On the one hand there is the threat of the landlord to take him into Court for the recovery of the arrears or eject him from the house; on the other the prospect of the Income Tax authorities prosecuting him for nonpayment, with the possibility behind it, of a period of imprisonment. I think the Chancellor himself will appreciate that, in these circumstances, more money is spent in the value of the time of those who institute inquiries on behalf of the Income Tax Department, in endeavouring to secure these small sums, than the sums themselves represent. If the Chancellor
agrees that the circumstances are as I have stated, perhaps he will frame an agreement or re-word the Clause—we do not care which, so long as the purpose we have in view is satisfied. We are pleading that the casual worker in this country, handicapped as he is, should not be further handicapped in his struggle during the present period of depression in employment.

The SOLICITOR-GENERAL (Sir Leslie Scott): The Committee will realise that, in regard to the Amendment now under discussion, dealing with casual labour, it is very important to remember the exemptions from tax, which the Acts confer upon everybody, by reference on the one hand to the total amount of their income, and on the other to their family and other obligations. A man living by himself to-day pays no tax for the first £150 of his income, so that, roughly, £3 per week—in the case of a man regularly employed all through the year, week in and week out—escapes Income Tax. If he is a married man, his total exemption is £250 and then there are allowances for children, so that the married man with three children pays no tax at all provided he has only an earned income which does not exceed £350. Even on the basis of the single man's entitlement to exemption, covering £150 a year, when we are dealing with an Amendment which presses for special treatment for casual labour on the ground of its uncertainty, and, in some trades, of its seasonal character, rendering employment slack at certain times of the year, we have to bear in mind that the £150 is a much higher effective limit in such cases than if the man were regularly employed all through the year. A man who, on the average of the year, is only employed say four days in six per week, or two-thirds, will in that two-thirds of the year have to earn £150 before coming under tax at all. Consequently, we must assume, even in the case of single men, that such a worker is in receipt of wages at a much higher rate than £3 per week. I know that casual labour is not employed by the week, and I am not suggesting that the terms of employment are by the week, but it means that this Amendment is addressed, even in the case of single
men, to those cases in which the wages, however paid, amount to over £150 in the year.
In the case of married men with children, it means that for practical purposes very few manual labourers at all are affected, and the Income Tax on weekly wage-earners enforced quarterly is only enforced under law on weekly wage-earners by way of manual labour. Therefore, we have to bear in mind that the claim on the sympathy of the Committee cannot be made on the footing that we are dealing here with very poor and struggling men. That is not the case at all. We are dealing with men who are in receipt of a rate of wages which in clerical walks of life means a clerk, of a good position as regards his career in life, and therefore is one that we must deal with, not on charity grounds, not eleemosynary grounds, but from the ordinary fiscal point of view. The Income Tax Acts recognise one basis of exemption as a main basis, namely, a limit of income, and that applies to everybody all through the community. Another basis of allowance—not of exemption—is family obligations, and that has been extended to certain cases where a man has lost his wife and so on and has a house-keeper or whatever it may be, but we have never in Parliament in the whole history of the Income Tax Acts adopted as a basis for exemption any such criteria as the terms of employment by which a man earns his income. I submit that it is a wrong basis and that Income Tax ought to be applied on terms that apply throughout the whole community and that this system of exceptions is a bad system.
One word more as regards the particular point raised by the hon. Member, that a man may have a good quarter followed by a bad quarter, and be assessed in the bad quarter and asked to pay tax in the next quarter, which is also a bad quarter. In fact, the method of assessment is one which takes into account to a great extent the averaging of the earnings and the grievance in practice is tempered very considerably. I want to point out that in the collection of Income Tax, as distinguished from the basis of assessment, administrative discretion is bound to come in to a certain extent. Administrative discretion in applying the law is a necessity, and in regard to the collection
of tax we cannot help it. We are all creditors at times in our lives, unfortunately, and we all from time to time give time to our debtors—again I say unfortunately, but it is so—and even the tax collector is in the same case. I assure the Committee that every endeavour is made to prevent hardship in the collection of this tax. The provision of Parliament that it should be collected quarterly instead of yearly was made for the express purpose of trying to prevent individual hardship.

Mr. HAYDAY: Say the first quarter of the finnacial year happens to be the good quarter. In the second quarter the man is assessed on his first, which would bring him in on the average for Income Tax purposes. During that second quarter the assessment is served upon him. His third quarter is no better, and by that time he is before the police court. His fourth is only a slight improvement. Then, when you take the average of the four, it is found that no demand ought to have been made it all. That is the problem that we are up against.

Sir L. SCOTT: I venture really to assure the Committee that that gloomy picture that has been painted is one that very, very rarely, if ever, happens in practice.

Mr. CHARLES EDWARDS: Every week in every year.

Sir L. SCOTT: An hon. Member says "every week." That, kind of exaggeration is very undesirable, and if the hon. Member who interrupted will be so good as to give me concrete cases afterwards I will have those individual cases investigated at once. Let the Committee think for a moment what alternative method of collection there is, if you are going to tax wage-earners to Income Tax at all, except the quarterly assessment and collection, with such a degree of human indulgence in hard cases, by way of postponement, as may be reasonably necessary in individual cases. The only alternative is deduction from wages at the source by the employer. That alternative was put forward and was objected to by the representatives of the men, on the ground that they did not want the employer to know what was the income upon which they were paying tax—the very reasonable objection that they did not want their
private means disclosed to their employers. The employers also thought that if the system were adopted it might lead to friction between employers and employed, and I think both sides were agreed at the time that deduction at the source was not the method that they wanted, and for those reasons it was not adopted, but it is the only alternative to the method now pursued.

Sir DONALD MACLEAN: In regard to the question of principle, I agree that the fact that a man earns an income which is taxable in a casual employment is no reason for distinguishing him from a man who earns an income in regular employment, but, as I understand it, the substantial point which has been made by my hon. Friend the Member for West Nottingham (Mr. Hayday) is this, that these men who earn their living in this casual way and have at times in the year been taxable, are worried unnecessarily.

Sir L. SCOTT: That is not the Amendment.

4.0 p.m.

Sir D. MACLEAN: It has arisen in the Debate, and we are entitled to discuss it. My hon. Friend assures me he has personal knowledge of such cases, and there are other Members also who have such knowledge, for I cannot imagine that they would put up a purely theoretical case, and the answer which the learned Solicitor-General gives is this, that the human sympathy in administration ought to meet the exceptional difficulties. The case made is that that does not work fairly, and that these men are subject to worry and anxiety in regard to payments which might reasonably be avoided. In considering these matters, we have to put ourselves as far as we can in the place of these men, who are not trained in the observation of official and legal documents, and who are frightened by the service of these notices in a way that my right hon. and learned Friend and myself are not frightened. I am only seriously alarmed when I get the red or blue notice. That is not the case with the class of citizens with whom my hon. Friend is dealing, and the point I would urge is whether there is not some way of meeting this administrative hardship. The right hon. and learned Gentleman says that there is not any hardship, but my hon. Friends behind me say that they know
of cases. That point ought to be cleared up, and the Department ought to see that these men, unaccustomed to these legal and sufficiently terrifying forms, and working under these conditions, are relieved as far as possible from this unnecessary anxiety.

Mr. WIGNALL: The right hon. and learned Gentleman, in dealing with this case, has made one or two surprising statements. First of all, we were surprised to hear that there is such a superabundance of human sympathy exhibited in the collection of the Income Tax. We are glad to hear that it exists, and we give credit to those who exhibit it. His second surprising statement was that very few cases of hardship have occurred. I would very much like the Department to ascertain for themselves the number of summonses and the number of men who have been hauled up to the Police Court and convicted within the last six months. I want to qualify that at once by saying that within the last few months there has not been that persecution that existed previously. There has been a little more human sympathy exhibited, but the system continues and the hardship of the system is there. The only difference is that though the men still receive their demand notes they hear very little more about them. The danger, however, is always there. The debt exists, or at least they say that it does, and, consequently, the man is always in danger of being brought up for default. The right hon. and learned Gentleman has expounded the position so far as the ordinary Income Tax payers are concerned. We do not find fault so much with the law as with the administration of it. It is quite true that there is this quarterly system of payment. The casual dock labourer works for anyone who will employ him. Each employer has to send a return of the man's earnings day by day, and at the end of the quarter his account is made up. Then, probably about the middle of the next quarter, if he has had a fairly good quarter's work, he gets his demand note. Have hon. Members ever heard a real docker express himself with regard to these demand notes for Income Tax? If they have not, there is a treat in store for them. The most expressive person in the world is one of these dockers who has nothing but debts, whose best suit of clothes is lying in the pawnshop, and
whose landlord is clamouring for arrears of rent, at the same time that the Income Tax collector is saying, "You have got to pay or go to gaol." It is true, and it is tragic.
The average casual labourer does not know sufficient about the methods of Income Tax administration to realise what he has to do. If he did, it would not matter, because, if he has not paid on the demand note, he is in debt, and, consequently, cannot get a rebate or a return of money overcharged. He cannot pay; he has not the means to pay. Although he may have earned sufficient in one quarter to make him assessable for Income Tax, for the rest of the year he scarcely earns enough to maintain existence. Income Tax is only chargeable on the income for the year. If a single man has earned £150 in the year—it does not matter whether he has had one good quarter and two bad quarters or how it is—he is assessable, and so is a married man according to the figures set forth. That is quite right, and we are not quarrelling with it. We quarrel with the system by which, if a man earns only £80 or a year, he has to pay on the first quarter in which he may have earned the greater portion of his income. I am trying to bring out the trouble and difficulty with which we are faced every day. I want to pay tribute and speak fairly of public servants who are always ready to help with information; but imagine one of these officials with perhaps 150 dock labourers demanding satisfaction. He is not in the frame of mind to reason or to argue, and consequently confusion arises. Go into some of our large docking centres and investigate the question; get the returns; get the number of summonses and the number of convictions—these things will tell their own tale. I think we have said sufficient to prove that the hardship exists. We are not trying to evade just payment of Income Tax. We are not here to help tax dodgers. There are enough of them to be found among the employing class, and among company promoters and people of whom we have heard so much during the last two days. We do not want to add to their numbers, but we do not want this hardship to fall upon the most hardly pressed class. I should like to know what it would cost if this Clause were accepted. What would be
the loss in revenue? These summonses are being issued and there must be a sufficient staff to do the work. What is the cost and what is the return that is obtained? These are points which ought to be considered. Above all, we want to make it clear that we are not here to evade just payment of taxation, but we

want to relieve the pressure of hardship upon these people who are least able to bear it.

Question put, "That the Clause he read a Second time."

The Committee divided: Ayes, 35; Noes, 224.

Division No. 183.]
AYES.
[4.13 p.m.


Banton, George
Jones, Morgan (Caerphilly)
Rose, Frank H.


Barker, G. (Monmouth, Abertillery)
Kenworthy, Lieut.-Commander J, M.
Royce, William Stapleton


Barnes, Major H. (Newcastle, E.)
Kenyon, Barnet
Swan, J. E.


Barton, Sir William (Oldham)
Kiley, James Daniel
Thomson, T. (Middlesbrough, West)


Bowerman, Rt. Hon. Charles W.
Lawson, John James
Walsh, Stephen (Lancaster, Ince)


Bromfield, William
Malone, C. L. (Leyton, E.)
Watts-Morgan, Lieut.-Col. D.


Cairns, John
Myers, Thomas
White, Charles F. (Derby, Western)


Carter, W. (Nottingham, Mansfield)
Naylor, Thomas Ellis
Williams, Col. P. (Middlesbrough, E.)


Davies, A. (Lancaster, Clitheroe)
Newbould, Alfred Ernest
Wintring ham, Margaret


Edwards, C. (Monmouth, Bedwellty)
O'Connor, Thomas P.



Foot, Isaac
O'Grady, Captain James
TELLERS FOR THE AYES.—


Irving, Dan
Rendall, Athelstan
Mr. Hayday and Mr. Wignall.


John, William (Rhondda, West)
Richardson, R. (Houghton-le-Spring)



NOES.


Adair, Rear-Admiral Thomas B. S.
Fell, Sir Arthur
Kinloch-Cooke, Sir Clement


Agg-Gardner, Sir James Tynte
Fildes, Henry
Lambert, Rt. Hon. George


Allen, Lieut.-Col. Sir William James
Fisher, Rt. Hon. Herbert A. L.
Larmor, Sir Joseph


Archer-Shee, Lieut.-Colonel Martin
FitzRoy, Captain Hon. Edward A.
Leigh, Sir John (Clapham)


Armstrong, Henry Bruce
Flannery, Sir James Fortescue
Lewis, T. A. (Glam., Pontypridd)


Ashley, Colonel Wilfrid W.
Ford, Patrick Johnston
Lindsay, William Arthur


Astor, Viscountess
Forestier-Walker, L
Lloyd, George Butler


Baird, Sir John Lawrence
Fraser, Major Sir Keith
Locker-Lampsom G. (Wood Green)


Baldwin, Rt. Hon. Stanley
Frece, Sir Walter de
Locker-Lampoon, Com. O. (Ht'ingd'n)


Balfour, George (Hampstead)
Gardner, Ernest
Lorden, John William


Banbury, Rt. Hon. Sir Frederick G.
George, Rt. Hon. David Lloyd
Lowe, Sir Francis William


Barker, Major Robert H.
Gibbs, Colonel George Abraham
Lowther, Maj.-Gen. Sir C. (Penrith)


Barnston, Major Harry
Gilbert, James Daniel
McCurdy, Rt. Hon. Charles A.


Barrand, A. R.
Gilmour, Lieut.-Colonel Sir John
Macdonald, Rt. Hon. John Murray


Beauchamp, Sir Edward
Goff, Sir R. Park
Mackinder, Sir H. J.(Camlachie)


Beckett, Hon. Sir Gervase
Goulding, Rt. Hon. Sir Edward A.
McLaren, Robert (Lanark, Northern)


Bell, Lieut.-Col. W. C H. (Devizes)
Gray, Major Ernest (Accrington)
Macnamara, Rt. Hon. Dr. T. J.


Bellairs, Commander Canyon W.
Green, Joseph F. (Leicester, W.)
Macpherson, Rt. Hon. James I.


Benn, Sir A. S. (Plymouth, Drake)
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Macquisten, F. A.


Bonn, Capt. Sir I. H., Bart.(Gr'nw'h)
Greenwood, Rt. Hon. Sir Hamar
Mallalieu, Frederick William


Bethell, Sir John Henry
Greenwood, William (Stockport)
Malone, Major P. B. (Tottenham, S.)


Bigland, Alfred
Greer, Sir Harry
Mason, Robert


Bird, Sir R. B. (Wolverhampton, W.)
Greig, Colonel Sir James William
Matthews, David


Boscawen, Rt. Hon. Sir A. Griffith-
Gritten, W. G. Howard
Middlebrook, Sir William


Bowyer, Captain G. W. E.
Guest, Capt. Rt. Hon. Frederick E.
Mond, Rt. Hon. Sir Alfred Moritz


Breese, Major Charles E.
Hacking, Captain Douglas H.
Montagu, Rt. Hon. E. S.


Bridgeman, Rt. Hon. William Clive
Hamilton, Sir George C.
Moore-Brabazon, Lieut.-Col. J. T. C.


Brown, Brig.-Gen. Clifton (Newbury)
Harmsworth, C. B. (Bedford, Luton)
Morrison-Bell, Major A. C.


Bruton, Sir James
Harmsworth, Hon. E. C. (Kent)
Munro, Rt. Hon. Robert


Burgoyne, Lt.-Col. Sir Alan Hughes
Herbert, Col. Hon. A. (Yeovil)
Murchison, C. K.


Burn, Col. C. R. (Devon, Torquay)
Hills, Major John Waller
Murray, Hon. A. C. (Aberdeen)


Casey, T. W.
Hinds, John
Murray, Rt. Hon. C. D. (Edinburgh)


Cautley, Henry Strother
Hoare, Lieut.-Colonel Sir S. J. G.
Murray, John (Leeds, West)


Clough, Sir Robert
Holbrook, Sir Arthur Richard
Nall, Major Joseph


Cohen, Major J. Brunel
Hope, Sir H. (Stirling & Cl'ckm'nn'n,W.)
Neal, Arthur


Colvin, Brig.-General Richard Beale
Hope, Lt.-Col. Sir J. A. (Midlothian)
Newman, Colonel J. R. P. (Finchley)


Cowan, D. M. (Scottish Universities)
Hope, J. D. (Berwick & Haddington)
Newman, Sir R. H. S. D. L. (Exeter)


Craig, Captain C. C. (Antrim, South)
Hopkins, John W. W.
Newson, Sir Percy Wilson


Davidson, J. C. C. (Hemel Hempstead)
Hopkinson, A. (Lancaster, Mossley)
Nicholson, Brig.-Gen. J. (Westminster)


Davies, David (Montgomery)
Horne, Sir R. S. (Glasgow, Hillhead)
Nicholson, Reginald (Doncaster)


Davies, Sir David Sanders (Denbigh)
Howard, Major S. G.
Norman, Major Rt. Hon. Sir Henry


Davies, Thomas (Cirencester)
Hunter, General Sir A. (Lancaster)
Norton-Griffiths, Lieut.-Col. Sir John


Davies, Sir William H. (Bristol, S.)
Hurd, Percy A.
Ormsby-Gore, Hon. William


Davison, Sir W. H. (Kensington, S.)
Hurst, Lieut.-Colonel Gerald B.
Palmer, Major Godfrey Mark


Dawson, Sir Philip
Inskip, Thomas Walker H.
Palmer, Brigadier-General G. L.


Dewhurst, Lieut.-Commander Harry
Jackson, Lieut.-Colonel Hon. F. S.
Pearce, Sir William


Dockrell, Sir Maurice
James, Lieut.-Colonel Hon. Cuthbert
Perkins, Walter Frank


Doyle, N. Grattan
Jesson, C.
Philipps, Gen. Sir J. (Southampton)


Edwards, Major J. (Aberavon)
Jodrell, Neville Paul
Pickering, Colonel Emil W.


Edwards, Hugh (Glam., Neath)
Johnstone, Joseph
Pilditch, Sir Philip


Erskine, James Malcolm Monteith
Jones, J. T. (Carmarthen, Llanelly)
Pollock, Rt. Hon. Sir Ernest Murray


Eyres-Monsell, Com. Bolton M.
Joynson-Hicks, Sir William
Pownall, Lieut.-Colonel Assheton


Falcon, Captain Michael
Kelley, Major Fred (Rotherham)
Pretyman, Rt. Hon. Ernest G.


Falle, Major Sir Bertram Godfray
Kidd, James
Purchase, H. G.


Rea, Sir Henry N.
Shaw, Hon. Alex. (Kilmarnock)
Turton, Edmund Russborough


Raeburn, Sir William H.
Shortt, Rt. Hon. E. (N'castle-on-T.)
Waddington, R.


Ratcliffe, Henry Butler
Simm, M. T.
Ward-Jackson, Major C. L.


Rawlinson, John Frederick Peel
Smithers, Sir Alfred W.
Ward, Col. L. (Kingston-upon-Hull)


Rees, Capt. J. Tuder- (Barnstaple
Sprot, Colonel Sir Alexander
Waring, Major Walter


Reid, D. D.
Stanley, Major Hon. G. (Preston)
Warner, Sir T. Courtenay T.


Remnant, Sir James
Stanton, Charles Butt
Weston, Colonel John Wakefield


Renwick, Sir George
Starkey, Captain John Ralph
Wheler, Col. Granville C. H.


Richardson, Lt.-Col Sir P. (Chertsey)
Steel, Major S. Strang
White, Col. G. D. (Southport)


Roberts, Samuel (Hereford, Herford)
Stephenson, Lieut.-Colonel H. K.
Wilson, Rt. Hon. J. W. (Stourbridge)


Roberts, Sir S. (Sheffield, Ecclesall)
Stewart, Gershom
Windsor, Viscount


Robinson, S. (Brecon and Radnor)
Sturrock, J. Leng
Winterton, Earl


Robinson, Sir T. (Lancs., Stretford)
Suoter, Rear-Admiral Murray Fraser
Wise, Frederick


Roundell, Colonel R. F.
Sugden, W. H.
Wood, Major M. M. (Aberdeen, C.)


Rutherford, Colonel Sir J. (Darwen)
Sutherland, Sir William
Wood, Major Sir S. Hill- (High Peak)


Rutherford, Sir W. W. (Edge Hill)
Taylor, J.
Worthington-Evans, Rt. Hon. Sir L.


Sassoon, Sir Phillip Albert Gustave D.
Thomas, Sir Robert J. (Wrexham)
Yate, Colonel Sir Charles Edward


Scott, A. M. (Glasgow, Bridgeton)
Thomson, F. C. (Aberdeen, South)
Yeo, Sir Alfred William


Scott, Sir Leslie (Liverp'l, Exchange)
Thomson, Sir W. Mitchell- (Maryhill)



Seddon, J. A.
Tickler, Thomas George
TELLERS FOR THE NOES.—


Seely, Major-General Rt. Hon. John
Townley, Maximilian G.
Colonel Leslie Wilson and Mr. Dudley Ward.


Sharman-Crawford, Robert G.
Tryon, Major George Clement

The following new Clause stood on the Paper in the name of Mr. G. LOCKER-LAMPSON:

"Where in any year of assessment any profits or income in respect of which a person has been charged or is chargeable under Case III of Schedule D finally cease to arise to that person he shall be charged for that year on the amount of the profits or income of that year and if the tax charged has been paid, any amount overpaid shall be repaid."

The CHAIRMAN: This Clause is not in order, as it might impose a charge.

Mr. G. LOCKER-LAMPSON: I quite realise that, in certain circumstances, which, I think, would very rarely occur, there might be a charge. Therefore, if after the word "charged," I put in the words "if he so elect," I think with those words it would be quite impossible for any charge to be imposed.

The CHAIRMAN: I think the words had better come in after the word "shall." I will accept it in that form.

NEW CLAUSE.—(Computation of profits.)

Where in any year of assessment any profits or income in respect of which a person has been charged or is chargeable under Case III of Schedule D finally cease to arise to that person he shall, if he so elect, be charged for that year on the amount of the profits or income of that year, and if the tax charged has been paid, any amount overpaid shall be repaid.—[Mt. G. Locker-Lampson.]

Brought up, and read the First time.

Mr. G. LOCKER-LAMPSON: I beg to move, "That the Clause be read a Second time."
This new Clause touches the cases of people who have got War Loan, and where the tax is not deducted at the source. The House of Lords the other
day, in a case between the National Provident Institution and the Inland Revenue, ruled that when a, man had War Loan, and sold out part of that War Loan, and then, perhaps, sold out the whole of it, in the last year when he got no interest at all he should not have to pay Income Tax on the previous year's assessment. Therefore the Chancellor of the Exchequer has now brought in his Clause 11 to meet that point. Clause 11 says that if you buy War Loan in the first year, when you have only received part of the interest, you shall pay on the actual year's income, but that thereafter, except perhaps for the first two or three years, you shall pay on the actual income. I maintain that that acts very unfairly in a great many cases. Supposing a man has £1,000 War Loan at 5 per cent., and supposing that in the first year he gets £25 income, in the following three years he gets a full income of £50, and in the last year, when he sells out, he gets only £20 a year. If you add that up, you find that the interest he has received amounts all together to £195, but under the right hon. Gentleman's Bill he pays on £295. That, is to say, he pays on a good deal more income than he receives.
That point is perfectly easily remedied if the Chancellor of the Exchequer will say that not only shall the man pay on his actual income in the first year when he buys War Loan, but that he shall also pay on his actual income at the end of the period, when he is selling out War Loan, because the Bill puts it on a perfectly fair basis so far as the beginning of the term is concerned, but leaves it in a very unfair position at the end of the term, when possibly he sells all his War Loan. I think the answer probably
will be that the Inland Revenue is already able to deal with that point by way of concession. I do not know, but it is possible that the Inland Revenue occasionally deals with that point by way of concession, though I think it is very inadvisable that the rights of the taxpayer should depend on concessions given from time to time by the Inland Revenue. I think it should be made a statutory right of the taxpayer in every case, and that the right should not depend on a concession given by the Inland Revenue. I have been talking lately to one of the greatest authorities on Income. Tax in this country, and he tells me that he does not suppose there is one man in 10,000 who knows what these concessions are. They are concessions which are based upon instructions sent out by the Inland Revenue, and then passed on to the various Inland Revenue officials. Very often the officials do not know what they are, and it is never found out that a particular taxpayer should have this particular concession. Therefore, I would suggest, not only that my right hon. Friend, if he can, should accept this new Clause, but I do suggest that all these concessions should be put into an Act of Parliament, so that the taxpayer should know what his statutory rights are, and that his rights should no longer merely depend on some haphazard concession of the Inland Revenue.

Sir L. SCOTT: May I make a preliminary remark on the subject of concessions? That does not arise on this Clause at all, because the case is met under the existing law, not by concession at all, but by an adjustment, to which the taxpayer has a statutory right, agree with the general principle that extra-legal concessions are a bad system, and I have said so more than once during the discussion on this Finance Bill. I leave that subject, because it does not arise on the Amendment. With regard to the new Clause, the type of income which is mainly concerned, I think, is the different War Loans, and the point, as I understand it, is this: The provision of the Clause in the. Bill is that, after the second year, the taxpayer is assessed on the previous year's receipts. The Mover of the new Clause makes no complaint about the basis of assessment in the first year, or the second year, but his attention is directed to the last of the series of years.
If a man sells out during the last year, before the end of the year, his receipts from his War Loan securities will be less than a whole year's income from those securities. If he has held them during the previous year he will be assessed on the receipts of the previous year ex hypothesi on the whole of the year's income upon those securities. It is said, and justly said, that if he had to pay the tax when he was receiving half the income from the securities as if he had received the whole of the income that would he unjust. I think I appreciate the point of the Amendment. The answer to it is this: that under the existing law there is in Miscellaneous Rules, under Schedule D, a rule (No. 3) which provides for the adjustment in the case so that the taxpayer does not pay in the last year on more than he has actually received.

Mr. LOCKER-LAMPSON: If that be the case, I beg leave to withdraw my Motion.

Motion and Clause, by leave, withdrawn.

The CHAIRMAN: The next new Clause on the Order Paper in the name of the hon. Member for Wood Green (Mr. G. Locker-Lampson)—[Income Tax on employments, etc.]—imposes a charge, and is therefore not in order.

Mr. LOCKER-LAMPSON: This is a very important matter. I do not know whether I can deal with it by altering it, as in the case of the last Amendment?

The CHAIRMAN: I am afraid not, as it appears to me that it would still impose a charge.

NEW CLAUSE.—(Repeal of 10 and 11 Geo. V., c 18, ss. 52–56.)

The Finance Act, 1920, shall be amended by the omission of Sections fifty-two to fifty-six, inclusive.—[Sir Arthur Fell.]

Brought up, and read the First time.

Sir ARTHUR FELL: I beg to move, "That the Clause be read a Second time."
I moved a similar Amendment to this last year. The feeling against the Corporation Profits Tax has steadily increased and spread throughout the country. The newspapers now understand much better than they did, and even the shareholders who suffer from it are beginning to associate with it the effect which it had upon them. I will try not to
repeat what I said last year, but I must shortly explain the facts, and the effect of the tax on the ordinary shareholder. This tax is upon the profits of the company; the debenture and preference shareholders are exempt from it. The whole charge of the tax falls upon the ordinary shareholders of the company. It amounts to an extra Income Tax at the rate of about 2s. in the £ on the profits of the various companies that come under it. There are certain exemptions about which we had a short Debate the other day. The ordinary limited liability companies of this country are all liable to it. It does not matter whether their profits are earned in this country or abroad, or in the Colonies, as so many are, they all have to bear this Corporation Profits Tax if they are registered in this country. In a good many of the Colonies and Dependencies they take into consideration the question of the Income Tax which is payable in England, but in the case of the Corporation Profits Tax they have not hitherto done it. On, therefore, all the profits, wherever in the world they are earned, by limited liability companies in England, falls the Corporation Profits Tax which is exacted from the ordinary shareholders of these companies.
To make quite sure of what the effect would be, or is, I had a long chat yesterday with the secretary of an important and substantial company which, having been a dividend-payer for many years, now pays this tax. I asked him what effect it had upon the ordinary shareholders. He replied that in their case the tax amounts to about £3,500 a year, and that would have admitted a further dividend of 12 per cent. to be paid; so that if the ordinary shareholders had been getting a dividend of 5 or 6 per cent. it would have permitted the company to pay 62 per cent. or 7 per cent. Unfortunately, many shareholders do not know this. Very few shareholders, if they get the same dividend as in the previous year, look into the question at all, and are not generally aware that but for the tax the company might be paying a higher dividend, though it is possible if the company could not pay the same dividend, owing to the Corporation Profits Tax, then those concerned would probably look into the subject and find out what was the cause of the reduction in the dividends. I take
it that the greater proportion of shareholders in the country do not appreciate that this falls upon them as an extra Income Tax.
In the company to which I have referred, and which I yesterday inquired into, the tax amounted to an extra Income Tax of 2s. in the £ on the ordinary shareholders, so that they are now paying 7s. in the £ Income Tax, and they do not know it. Last year they must have paid 8s., although I believe the Corporation Profits Tax was not fully assessed. This, then, is the effect of this tax on the ordinary limited liability companies of this country, and it is a most serious effect. I wonder if the Chancellor of the Exchequer or the Solicitor-General has looked into the question of what effect this is having upon the trade of the country and upon the issues of capital which are being made? The effect is very apparent at the present time. It is, I believe, the fact that in the last 12 months there has hardly been an issue made of the ordinary shares of any company, and I believe I am right in saying there has not been one new company which has issued ordinary shares to the public in the past 12 months. That is most extraordinary, and is rendered the more remarkable following the investment boom. In the old days when there were large investments, there would have been hundreds of companies started in the City of London. They would have obtained their capital, and it would have brought business to the City, and trade and profit to this country. In all probability it would have gone further and helped to open up the Colonies and Dependencies, and even foreign lands. The employment of this capital for these purposes in days gone by was provided by these registered limited liability companies. They used to be started in London most successfully, and countries like Rhodesia, Hudsons Bay, and great fields of the world were opened up by private shareholders 'by their investments. At the present time this has totally ceased. There are no new companies at present being started in London. The employment of money has been by way of investment entirely in foreign loans, loans to our Colonies and Dependencies and loans to successful concerns in this country which have made issues of further capital, very rarely have even these successful issues been made by way of
ordinary shares. They have limited their issues to debentures or preference shares. Surely, when the ordinary shareholders are feeling the effect of this tax, and are not likely to subscribe for ordinary shares as they used to do in this country, it is not well! There are great blocks of these companies which at different times have been established, and whose head office is in London, who fall under this Corporation Profits Tax. I refer to one class. The great railway companies in the Argentine Republic, Hundreds of thousands of pounds of English capital have been provided in the past, to the great benefit of the Argentines, and a corresponding benefit to the manufacturers and people of this country. A very large amount of this money is represented by the railways. These companies represent enormous sums of English capital and earn a large profit. All fall under this tax. English railways do not fall under it. All these other companies do fall under it. In the case of these companies it amounts to a very large sum.
It must have occurred to the Chancellor and to the Government that, while these limited liability companies continue to work under present conditions, they have only to transfer their head offices abroad — their management is there now—and they would not be liable to this heavy burden. I do not say that arises at the moment, because they had hoped this would be the last year on which this tax would be imposed; but if ever the idea got about that this was to be a permanent tax upon the limited liability companies, then I am quite sure that the present companies will see whether or not they can to their advantage change the status of the company and the locality of its management and register in another country, and consider whether new companies should be registered in this country or be registered in other countries. It is a matter which no doubt the Chancellor of the Exchequer will deeply consider, because I believe that the future of industry and the progress of this country, and even of the Empire, largely depend upon the fact of whether these new issues are to be made in London, under London influence, and British influence, or whether they are to go elsewhere. If it is once realised that this is to remain a permanent tax,
not one of these companies, I believe, but will consider the position and see what they will have to do in the interests of their shareholders.
Even in the case of the companies which are earning their money abroad it may be just as well that the management should be abroad as here. Not only would they lose the Corporation Profits Tax if they transferred abroad, but they would lose a large part also of the Income Tax. In cases of that sort the shareholders in this country would still continue to pay Income Tax upon the dividends which they received. In all eases Income Tax paid by an English company is much larger than the dividends paid to the shareholders. That portion must be loss for the Income Tax collectors, as well as for those who take the Corporation Profits Tax if these companies remove their head office abroad. I will not dilate, on that any further, but I will say with regard to the particular class which you are taxing, the ordinary shareholder, that he is the salt of the commercial community. He is the man who takes the risk. He is the man of energy and enterprise. He goes to foreign countries and says: "I believe there is a great future for this country: I will put my money into it, will grow up with it, and my investment kilt increase in value with the growth of the country." These people are those who are being singled out to bear this tax, and they were well described the other day in one of the principal financial papers in the city, from which I will read the following passage:
Ordinary shareholders, as everybody knows, are the people who take the risk. They are the people who initiate; the people willing to test new methods, new ideas, and new openings. For the rest of the community, through its Government, to impose a fine upon them for so doing, when it is crying out for employment, and paying out in doles for unemployment times over the yield of the fine, comes very near indeed to the limit of imbecility. The effect is not merely to check enterprise; the effect, by heightening the risks and lowering the rewards of enterprise, is to add to the cost of capital for the purpose. The further effect of adding to that cost is to raise the cost of debenture and preference capital pro rata. Thus the very foundation of joint-stock investment is undermined. In short, there can be no sort of question but that alike in limited yield and in unlimited incidental harm the Corporation Profits Tax is a bad tax, and that the sooner it cam be abolished the better.
That is a short summary of the results of this tax. I hope if the Chancellor of the Exchequer cannot do anything to remedy this grievance this year, at any rate, he will be able to tell the business community that this is the last year this tax will be imposed, and that some other way must be found of raising the money which is now being raised by the Corporation Profits Tax. I think this money could be much better raised by an increase of the Income Tax, which falls upon everybody, while this tax falls only on the most enterprising people in the country, and the very people whom the Chancellor of the Exchequer and the Government should do their best to encourage.

Mr. RAWLINSON: I wish to support the Second Reading of this Clause.
I ventured to make a few remarks upon this Clause on the Second Reading of this Bill and the Financial Secretary to the Treasury received my remarks very kindly and agreed to make a slight concession which I see he has carried out by an Amendment which appears later on the Paper, but it only deals with a very small class of companies which are not allowed to use the word "Limited after them. I object to the Coropration Profits Tax on two grounds. The first is that the tax is a bad one; and, secondly, the way in which it is raised is also exceedingly bad. The true history of this tax I have never been able to discover. I know some time ago we were discussing.a luxury tax which was put forward by the Government because there was a suggestion that we might be able in this way to increase the turnover, but that proposal fell through entirely, and the next tax that was produced was the Corporation Profits Tax. I have never yet heard a really clear defence as to why this tax was put on at all.
Let me now deal with the way in which it is imposed. The way you arrive at the profits is, instead of finding out the profits in the same way as you do in the case of the Income Tax—namely, the real profits of a year after deducting expenses, you are not allowed to deduct any interest on a permanent loan. How that proposal slipped through the House of Commons I do not know, and I am certain that few hon. Members know how it got through. In ascertaining the
profits of a company you are not allowed to make any deduction for interest on a permanent loan. There is a company in which I am interested, although not financially, which occupies very considerable premises.
Those premises were built and bought with borrowed money and erected in this country, and ever since then this company has occupied those premises, and they have been paying interest on their permanent loans. Each year they have not, been able to make a profit. It is an education establishment, and there is no difficulty in making up the small details of the business. Since the Corporation Profits Tax came into being, owing to this extraordinary Clause in the Finance Act which by this proposal we are seeking to repeal, this company is not entitled to deduct a single penny on account of the interest on their permanent loan, and the company now have to pay £500 by way of the Corporation Profits Tax on a concern which has never made a profit and is never likely to make a profit. I put that case forward because it shows that there is something wrong with the tax, and a case of that kind ought to be exempted even if the tax cannot be abolished altogether. I can give the exact figures if it is thought necessary, but the Chancellor of the Exchequer knows the case to which I am referring. This is an instance of a considerable sum of money having been spent on the buildings. The people have occupied them and no sum is allowed to be deducted for what really is the rent of the premises where the business is being carried on. As regards the tax itself, let us see how it affects people. It is really an Income Tax of so much in the £ upon the interest of the holders of ordinary shares, and it is levied upon every holder of ordinary shares, irrespective of whether they are exempt from taxation or not. Take the case which I know this House always likes to hear, that is the case of the widow or orphan whose total income is only £150 or £160 a year. She is exempt from the Income tax altogether by the law of the land, but if she has the misfortune to invest her savings in the shares of a company then she has to pay the Corporation Profits Tax at 5s., 6s., or 7s. in the £.
It is obvious that this is an unfair tax, because there are no exemptions under it. There are exemptions under the Income Tax up to £1,000 or £2,000, but
there are no exemptions under the Corporation Profits Tax. Even from the point of view of the Income Tax there is not the slightest doubt that a very serious injustice is being done to those who are now getting remissions under the ordinary Income Tax, because they cannot get any remissions under the Corporation Profits Tax. My hon. Friend has pointed out the effect upon the big companies of this liability and the prospect of the Chancellor of the Exchequer losing a very considerable amount by this proposal. I am familiar with many trading concerns in England in the form of partnerships. I know that it has been the policy of this House in the past to encourage partnerships in every way. The policy has been to turn these partnerships into limited liability companies, and the idea has been to get them to do this. The Government gain by this policy, because the stamp duty in the first place is pretty considerable, and there is also Income Tax paid on the profits of the company. Therefore, for some reason or another, it has always been thought desirable to turn their businesses into a limited liability company.
I have known one or two instances since this tax was first imposed of people turning their businesses into limited liability companies, but directly they do it they have this tax put upon them in addition to their ordinary taxes. I know the case of a large printing works which is run by two or three brothers, and not only have they to pay large sums in the way of the stamp duty, but they have to pay this Corporation Profits Tax in addition to their ordinary taxes. I am only putting forward the case of small trading companies carried on exclusively in England, and even from that point of view I ask is it a wise thing to keep on this tax, which is a very bad one. I strongly appeal to the. Chancellor of the Exchequer to see whether if he cannot abolish the tax he can at least do away with some of the injustices I have mentioned. I hope he will be able to make a bold sweep and have done with this tax once and for all.

Sir W. PEARCE: In addition to the objections which have already been raised to this tax I want to call attention to another, and that is the unequal incidence of this tax between one industry and another. A most striking example is the case of the Port of London. The
business of that port has been divided between the dock companies and the wharfingers. That has accentuated the situation because the dock companies are immune from the Corporation Profits Tax, but the wharfingers have to pay the tax. The same thing happens with regard to a large number of other companies carrying on very extensive operations. I wish to call the attention of the Chancellor of the Exchequer to this point because, in addition to the argument that this is a very heavy tax, there is the point that its incidence ought to be fair and equal. I think that is another reason why this tax should disappear altogether next year.

Sir EDMUND BARTLEY-DENNISS: It is very clear that in the present state of our national finances the Chancellor of the Exchequer cannot afford to repeal this tax, and therefore this discussion may, to some extent, be considered as purely academic. The larger the sum involved the more important it is that we should ascertain from the Chancellor of the Exchequer here and now whether he intends to make this tax permanent or not. That is really the question we wish to put to the right hon. Gentleman now. We do not intend to divide upon this proposal because we know it is impossible for the Chancellor of the Exchequer to do without the money.
5.0 P.M.
When the tax was first imposed, in 1920, I opposed it in common with other hon. Members very strongly indeed. There is not a good word to be said for it. It is an absolutely unjust tax. It is unequal, and that is, of course, a great test of taxation, because it does not apply to all limited companies. The only excuse given by the then Chancellor of the Exchequer, the present Lord Privy Seal, for bringing it in was that inasmuch as in 1867 limited liability companies were allowed to be formed to limit their liabilities, therefore they ought to be taxed for that privilege. Members of the House could not see any reason in that. On the contrary, bearing in mind public policy, it should be a ground for the remission of taxation, because limited companies facilitate very much, not only the obtaining of revenue, but the actual collection of it. It was accepted in 1920, undoubtedly because it was absolutely necessary to raise more money. The Chancellor of the Exchequer and his predecessor had stated perfectly clearly that the Income Tax
was so high that it was impossible to increase it. It was higher than it ought to be and they could not increase it. But they had to get money somehow and so they brought in this Corporation Profits Tax, on the flimsy pretext I have mentioned in regard to what occurred in 1867. The real reason, however, for it was the need for money, and it, is a double Income Tax on a limited class of people. Hon. Members who have spoken have given very weighty reasons for the repeal of this tax and have even suggested that it would have been better to increase the Income Tax than to continue the Corporation Profits Tax.
Instances have been given of hardship to individuals. Two years ago I mentioned in this House the effect on the Lancashire cotton trade. An enormous number of the working classes have shares in the mills in which they work. They are not liable to Income Tax, but they have to pay it in the shape of this Corporation Profits Tax, and from it they are unable to get relief. If it had been in name what it is in fact, an Income Tax, they would have got relief and the money would have been returned to them. But as it is, this Corporation Profits Tax is deducted from the interest on their very small investments, although they are not liable to Income Tax at all. I ventured to prophesy when the tax was introduced that it would be continued. It is a tempting tax for the Chancellor of the Exchequer, because it is so easy to collect. I also asserted my belief that it would be increased as time went on. I still believe it will be if this House suffers it to continue. I seriously warn the Chancellor of the Exchequer that he will find an enormous amount of opposition to this tax in the future. He may say he wants money and must have it, but eventually the House will insist on it being raised in a more equal and just way, from the whole of the public and not from a section of limited companies, and from one class of shareholders, the ordinary shareholders in these companies.

Mr. PRETYMAN: This matter was considered by the Income Tax Commission on which I had the honour of serving. I cannot now vote against the Government without giving a reason for my action. We who sat on the Income Tax
Commission for two years tried to arrive at some basis on which taxation should be raised according to ability to pay. The matter was worked out in great detail, and the recommendations of the Commission were accepted by the Chancellor of the Exchequer and by the House, and have been almost entirely embodied in our Statute law. At the very moment when the bulk of those recommendations on the basis of ability to pay were being accepted by the House, this entirely new tax was imposed without any regard whatever to the principle of ability to pay, and thereby the whole of our calculations were upset. The only ground on which I understood this tax was imposed was that in the consideration of Income Tax by the Income Tax Commission, one of the points we had great difficulty with—and this will be within the recollection of the Committee—was the question of charging Income Tax upon co-operative societies. In the evidence they gave before the Income Tax Commission, those who represented the great co-operative societies stated that if a Corporation Profits Tax were imposed they would he perfectly willing to pay it.
Acting no doubt on the faith of that statement, the tax was introduced into this House, and immediately the representatives of the co-operative societies raised such strong objections and such an outcry against being asked to pay it, although they had actually given evidence before the Income Tax Commission that they would be prepared to pay, that they were exempted. Thus the whole object of the tax fell to the ground, and other people who are already paying the Income Tax are now burdened with this tax. On the grounds I have stated, I cannot vote with the Government on this occasion unless we get some assurance that this tax is regarded as a temporary tax. I understand, of course, that the present Chancellor of the Exchequer was not responsible for it, and that he has to face an extraordinarily difficult financial position in which he has the support of every member of this Committee. If he will say he recognises the justice of our claim, but that he cannot take the tax off now, because he must get money, and yet he regards it as a temporary tax, then I shall feel I can go into the Lobby with the Government. But if this is to be a permanent tax,
for the reasons which have been given by hon. Members on both sides of the Committee, then I shall certainly vote against it. I want to get an assurance, however, that it is to be regarded only as a temporary tax.

Colonel NEWMAN: We have been told that the object of this tax in the first place was to get more money. That, I think, is the origin of most taxes imposed by Parliament. Like other speakers, I am well aware that the Chancellor of the Exchequer needs every penny he can get in order to balance his Budget in the present financial year, and on that ground, if I could get some assurance from the right hon. Gentleman that this tax is not to be a permanent tax, I might be inclined not to vote against the Government. But I am going to vote against it, because, to my mind, the continuance of this Corporation Profits Tax involves a breach of faith with the retail trading community. The retail traders got a certain pledge, or, rather, an undertaking from someone in the right hon. Gentleman's office last year in regard to this tax. I think it was the Financial Secretary who assured them that if the tax were kept on this year, the Government would assess to it the co-operative societies.

The CHANCELLOR of the EXCHEQUER (Sir Robert Horne): May I say at once that nobody in my office ever gave any such pledge.

Colonel NEWMAN: That is the story which is told to me. It will be in the recollection of the Committee that last year when this tax was being discussed, there was an Amendment down to exempt the co-operative societies from its operation. After all, it was a comparatively small sum which those societies were called upon to pay—I think it was about £180,000—but they turned up in full force against, it, there was hardly a Member on the Committee who was not lobbied, excepting perhaps myself, whom they knew of old. Some of us were told by the Whips on that occasion to be back from dinner by 9.30, but when we got back at that hour we found that a Division had been taken and that the Government had been defeated by two votes. As a result, a deputation went to the Treasury on behalf of the retail trading community, and, as I am informed, they saw the Financial Secretary to the
Treasury, who gave them a pledge or, at any rate, who gave them to understand that the Government were so nettled at their defeat that they were considering whether they should not recommit the Bill or else, if the tax was continued in the next Budget, assess the co-operative societies to it. Fortified with that pledge or understanding the deputation left the Treasury, but to their astonishment when this Budget came along they found in it no mention of the co-operative societies or of their being rendered liable to it. The retail trading community feel that they have been let down by the Chancellor of the Exchequer. I can speak with some authority for them, and I say that they feel this very acutely.

Sir R. HORNE: No such pledge was ever given.

Colonel NEWMAN: At any rate, that was the understanding arrived at.

Sir R. HORNE: Neither was there any such understanding.

Colonel NEWMAN: At any rate, they have been led to believe that that was the understanding arrived at and they are extremely angry with the Treasury because it has not been given effect to. I am sorry that the Chancellor of the Exchequer or someone at the Treasury could not have received a deputation from the retail traders before this Debate. They should, at any rate, have done so, and told them that they had been misinformed. They should have told the deputation frankly that they could not do this thing and that the Chancellor of the Exchequer declined to raise a hornet's nest about his ears by bringing the co-operative societies under the operation of the tax. The right hon. Gentleman has not done that, and as one speaking on behalf of the retail trading community, I intend now to vote against the Government.

Sir R. HORNE: I do not think I have ever concealed from the House of Commons the fact that I am not at all enamoured of the Corporation Profits Tax. I entirely agree with much that has been said to the effect that it is a burden on the industry of this country and a check to enterprise. All taxation has to some extent the same effect. Undoubtedly a very high Income Tax and a high Super-tax produce that result to-
day to a degree which disturbs the equanimity of everyone who is interested in the subject. Accordingly, as has, I think, been well recognised by Members of the Committee on the present occasion, it would be quite impossible for me to give up this source of revenue just as it would be impossible for me to give up many other sources of revenue which are at least equally burdensome. For example, I have no doubt that I should shock my hon. Friends opposite if I said that I regard the extent of Super-tax at the present time as one of the greatest burdens upon industry—as even more burdensome than the Income Tax. It may seem to be something like a paradox to say that to take away money from those who seem to have it in excess, is a course of action which can be readily defended as expedient and profitable, but that really you are taking away money from the people who have shown that they know how to use it and how to make it fructify. I venture to say that, paradoxical as it may seem, one of the heaviest burdens upon industry to-day is the grevious extent of the Super-tax. I cannot, however, give up any portion of the Super-tax at the present time, as I am sure hon. Members will readily realise: nor can I give up the Corporation Profits Tax; but I should be as sorry as anyone who has spoken this afternoon if I were to think that the Corporation Profits Tax had taken any permanent place in our system of taxation. It can only be regarded, at the best, as a second-rate tax, if it even amounts to that; but, as I have said, the considerations which move one in dealing with taxation at the present time are rather such as compel one to adopt expedients that are ready to one's hand, in order to meet the exigencies circumstances over which we have not sufficient control.
Having said so much, I hope I have satisfied hon. Members with regard at least to my own personal opinion on this matter. I cannot give anyone's opinion but my own, but I readily assent to the general principle with regard to the Corporation Profits Tax. I agree also that to some extent it forms a double Income Tax upon a certain portion of the community, although I believe some modified justification can be given for it even upon that score, if it be remembered that, perhaps, there is an oppor-
tunity of treating it as a working expense, and, to some extent at least, passing it on to the consumer—the person who buys the goods. That is not by any means a full justification, but it affords some sort of excuse and explanation as to this particular tax. It was said—I think by the hon. Member for Oldham (Sir E. Bartley-Denniss)—that no sort of excuse has ever been made for this tax. While I agree with a certain amount of the criticism that has been made, I do not entirely accept that statement. A certain measure of privilege is obtained by limited companies, by reason of the fact that their shareholders are not liable to the same extent as if they were partners in a private business. That, no doubt, has been a great advantage to trade, but, at any rate, the privilege must be recognised when one is dealing with this matter. I do not, however, want to delay the Committee by presenting that consideration further, but I should like for one moment to advert to something that was said by my hon. and learned Friend the Member for Cambridge University (Mr. Rawlinson). He instanced the case of a private partnership of several brothers who were contemplating the possibility of turning their business into a private limited company, but who were deterred by the operation of the Corporation Profits Tax. What is the balance of considerations, for, believe me, they are not all on one side? The private partnership has to pay Super-tax upon its income. The private limited company has not to pay Super-tax on anything it puts to reserve, and, therefore, it escapes a burden which is imposed upon the private partnership. I can imagine two or three brothers balancing these considerations and saying to themselves, "Can we better afford to bear the Super-tax as a private partnership, or the Corporation Profits Tax as a private limited liability company?" And, in cases where the private partnership was a very lucrative concern, it would, in my view, pay them better to become a private limited company, with the necessity of paying Corporation Profits Tax, rather than to remain a private partnership with the burden of Super-tax upon them. It altogether depends, of course, upon the financial condition of the firm and the rate of profit-making which it is enjoying at the time.
The illustration I have given will have brought home to the Committee the fact that there is at least this one justification for the Corporation Profits Tax, that the private limited company, while it has to bear the Corporation Profits Tax, is at least escaping a burden which it would have to bear if the business were being carried on as a private partnership. As I have said, these are excuses and explanations, and I have assented quite frankly and candidly to the main proposal, that it is at the best a second-rate tax, and that it should not become a permanent part of our system of taxation. I now turn to a less pleasant matter which was raised by the hon. and gallant Member for Finchley (Colonel Newman). The hon. and gallant Gentleman complains that the Government has been guilty of a breach of faith towards the co-operative societies.

Colonel NEWMAN: Towards the retail trade.

Sir R. HORNE: Towards the retail trade. No such attack upon the Government has any foundation whatever. Let me recall to the hon. and gallant Gentleman what happened last year. It is not any use saying that he was away at dinner. That kind of excuse is not of any value in the House of Commons. The situation was that the Government proposed to apply the Corporation Profits Tax to co-operative societies, in accordance with what seemed to be a recommendation—although it is now disputed by the co-operative societies—of the Royal Commission on Income Tax; but a very eloquent and powerful case was made by my hon. Friend the Member for Linlithgow (Mr. Kidd). He put forward the same case the year before and failed, but he put it forward again last year and got a great accretion of support, with the result that the Government was defeated, and we had seriously to consider whether we should accept that defeat as so serious as to give rise to consideration whether we could carry on with the Finance Bill or not. It is no use saying that that defeat occurred when a certain number of people were away at dinner. Many may have been away at dinner, and, although my hon. and gallant Friend would, as I understand, have voted with the Government on that occasion, many other people who were absent might have voted the other way.
The fact was that in a large House—it was by no means a, small Division—the Government suffered defeat. What happened thereafter? I am very familiar with the circumstances, because it was my first Finance Bill as Chancellor of the Exchequer, and I think my hon. and gallant Friend will take it from me that I did not regard that defeat lightly. I had made the best case I could to a large House, and had been defeated. That is how the matter stood, and that is the fact which must, be considered in relation to the decision. My hon. and gallant Friend says we have been guilty of a breach of faith by not coming to the House to ask it to reverse that decision.

Colonel NEWMAN: No. May I interrupt for just a moment? The right hon. Gentleman missed the point of my complaint altogether. My complaint was not that the Division was taken while I was at dinner. That has happened in other cases, and I am only sorry for my own negligence. But subsequently, either the next day or two days after, the Financial Secretary to the Treasury received a deputation representing retail traders, and gave them to understand that either the co-operative societies would be assessed to Income Tax or else that the Corporation Profits Tax would be repealed altogether. That is what. I complain about.

Sir R. HORNE: I am prepared to say with complete confidence that not only was no such pledge given as my hon. and gallant Friend suggests, but that nothing approaching any sort of understanding upon the matter could possibly be founded upon what was said by my hon. Friend the Financial Secretary to the Treasury, upon whom I have as great reliance as upon myself, and who knew my views. As the person who is alleged to have come to this understanding, he has denied it. I accept his denial, and I should expect my hon. and gallant Friend to accept it also.

Colonel NEWMAN: When has he denied it? He is at The Hague.

Sir R. HORNE: I am familiar with the circumstances, because I have heard this suggestion before. The question has been asked on the Floor of the House, and the denial given. Why the suggestion should be repeated I cannot tell, but I think it is not out of place for me to tell the Com-
mittee that, after the Division to which I have referred, I was approached by a representative of the retail traders, whose complaint to me was that the Government had deliberately engineered the Division in order to let them down. If that be the class of accuracy, or the attitude of mind with which these people are going to approach this matter, the Committee will forgive me if I ask them to accept the version of the, Financial Secretary to the Treasury rather than that which has been given by my hon. and gallant Friend, which is a complete travesty of the facts. There was no suggestion whatever on the part of the Treasury that this matter was going to be reopened, and I hope I have now laid the matter to rest. My hon. and gallant Friend says that the retail traders of this country are a very large body. I agree, but, however large they are and whatever voting power they control, we really must be honest with each other and state the facts with accuracy. I think I have dealt with all the matters that have been raised—

Sir A. FELL: Will the right hon. Gentleman deal with the question of the Argentine railways?

Mr. RAWLINSON: And also with my other point as to whether he can see his way to make any concession as regards interest on permanent loans?

Sir R. HORNE: I beg my hon. and learned Friend's pardon for not recollecting that that was one of the matters which he raised. I readily understand the difficulty of the particular case to which he refers, where permanent loans are raised upon buildings and lands which, as I understand, were purchased with borrowed money. The reason, as I understand it, why the provision about permanent loans was inserted in the Clause dealing with this matter in the original Act, was in view rather of debenture issues than of any permanent loans such as my hon. and learned Friend has referred to. To anyone conversant with money matters it will be apparent that by means of debentures the imposition of the Corporation Profits Tax could, to a large extent, be evaded if interest upon debentures were to be exempted from the tax—or, as I should rather put it, if it were to be allowed as a working expense
before arriving at the amount which ought to be assessed to the tax. My hon. and learned Friend, who is familiar with these things, will readily see how that position could be abused, but I shall certainly, in accordance with his request, look into this matter of permanent loans of a public character, and if there is any way in which I can alleviate the position, without infringing upon the general necessities of the situation, I give my hon. and learned Friend the assurance that I will do so.

Mr. RAWLINSON: Could it be done by exempting debentures existing in 1920?

Sir E. BARTLEY-DENNISS: Will the right hon. Gentleman deal with the question of small shareholders who are not liable to Income Tax?

Sir R. HORNE: I am afraid I cannot give any answer upon a specific matter which has not been brought to my notice sufficiently early for me to get information upon it, and that must be my reply to my hon. Friend the Member for Yarmouth (Sir A. Fell). As regards the suggestion of the hon. Member for Oldham (Sir E. Bartley-Denniss), I am afraid I could not undertake at the present time to carry out the proposal he commended to me.

Sir E. BARTLEY-DENNISS: Will the right hon. Gentleman consider it.

Sir R. HORNE: I will certainly consider it.

Question, "That the Clause be read a Second time," put., and negatived.

NEW CLAUSE.—(Estate Duty.)

Notwithstanding the provisions of Section sixty, Sub-section (1), of the Finance (1909–10) Act, 1910, the proviso to Sub-section (5) of Section seven of the Finance Act, 1894, shall continue to operate for the purposes of estimating the principal value of agricultural land for purposes of Estate Duty.—[Captain Fitzroy.]

Brought up, and read the First time.

Captain FITZROY: I beg to move, "That the Clause be read a Second time."
This Clause deals with Death Duties as they affect agricultural estates. Under the original Act of 1894 there were certain provisoes for the protection of agricultural estates. Under the Act of 1909 they were repealed. The first of them
was that agricultural land should be assessed for Death Duties on a valuation arrived at by multiplying the net annual income by a maximum multiplier of 25, instead of being assessed on a sum estimated at what it might be expected to sell for if sold piecemeal to the highest bidder. In the Act of 1909 there was inserted in Section 60, Sub-section (1), a provision which really repealed the provisoes of the former Act. The Subsection was introduced really so that its provisions should affect personal estate, that is, money in the form of stock and shares, and was not intended to apply to agricultural estates. I do not know whether it is the intention of Governments to effect, by Finance Acts, the absolute extinction of agricultural estates as agricultural estates. If that is so, no doubt the provisions of the Finance Acts will in a very short time have that effect. But I am quite certain that this Government at any rate has not the intention of destroying agricultural estates. Therefore it seems to me that they should repeal that part of the 1909 Act which affects agricultural estates in the way I have described. To describe it a little more minutely, I might say that under the provisions of the 1894 Act, on the death of the owner of an agricultural estate, his successor was called upon to pay duties on a valuation of 25 years rental value of the estate, and under the 1909 Act this was altered by the inclusion of these Subsections, so that the valuation should be on the basis that the estate should be split up, and the eyes, as it were, taken out of it.
To such lengths has this system proceeded that a certain estate in my constituency, which has become famous owing to the fact that Death Duties under this 1909 Act have been paid on it, has operated in this manner. It is known as the Ellesmere Estate. Lord Ellesmere died, leaving an estate, part of which was situated in Northamptonshire, to his son, and his son decided to dispose of the estate as a unit in order to pay Death Duties. He employed a well-known auctioneer and valuer in London, who acted in conjunction with a local valuer, and they fixed the price which he was entitled to get for his estate, and he sold it for the price fixed by the valuers. I imagine he sold it to a land speculator. At any rate, the purchaser split it up into various small units
and sold them by auction, I think employing the valuer who had originally valued it, and he realised a larger figure than he paid for it. The Inland Revenue claimed Death Duties not on the price at which the son had sold the estate, but on the price which the speculator had obtained after it had been split up. That appears at first sight to be an intolerable and incredible state of affairs. Those are the actual facts of the case. The case was taken right through the courts, and ultimately was decided in favour of the Inland Revenue. I am certain it cannot have been the intention of Parliament when they introduced those Subsections into the 1909 Act that such a state of affairs should be created, the actual successor to a property being called upon to pay Death Duties not on the amount at which he actually sold the property, but on the amount which the person to whom he sold it got for it at a subsequent date. I feel sure this must have the sympathy of the Chancellor of the Exchequer, and that he will assure us that as soon as he is able to do it he will reintroduce the original proviso in the 1894 Act and bring the, law back to its origin-al condition.

Mr. PRETYMAN: I want to make quite clear how this question has arisen. It really appears to have been a misapprehension. We recognise that the Chancellor of the Exchequer has shown great sympathy with agricultural and rural interests, and we do not wish to press him unduly to do too much this Session. But this is really such a serious grievance that I hope the Committee will realise it and unilerstand it, and if the right hon. Gentleman cannot give it us this year, we shall get an understanding that it will be most seriously considered next year. The way it has arisen is that under the Finance Act of 1909–10, Subsection (1) of the Section to which my hon. and gallant Friend has referred simply repeals the proviso in the Act of 1894 under which agricultural estates were to be valued on a multiple of the net rental instead of on the assessed capital value. I believe that- was the limit of the intention of the House. Then came Sub-section (2), which had no reference to agricultural property at all, and was not primarily intended to apply to it. What Sub-section (2) said was that
In the case of any person dying on or after the 30th day of April, 1909, the Commissioners shall fix the price of the property according to the market price at the time of the death of the deceased, and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time.
The object of that was, as I understand it and as my recollection carries me back to that date, to deal with cases where large blocks of stocks and shares which were the property of some individual who had died were placed upon the market and had to be valued for Death Duties and a claim was made that a reduction should be allowed on the market price of the day on the ground that it had been necessary to realise the whole of those stocks and shares at once. I do not think it was then realised that the House had any idea that that was going to be read with the previous Sub-section and was going to be applied to agricultural estates.
The effect is that an agricultural estate is placed in an infinitely worse position than a building estate. In the case of a building estate of 100 acres, if you take the aggregate value of the whole or if you take it in lots, there is practically no difference. If you take it as a whole you take it for what anyone would give for it as a whole as it stands. If you take it in lots, the sale of the land which is immediately on the frontage must precede the sale of the other land, and, therefore, when you sell it in lots you have to discount it according to time, and that brings it back to the single value. I have gone into the matter and I know how it is done in practice. Where you are going to sell 100 acres of building land the Inland Revenue are entitled, in assessing the Death Duties, to lot that out to the best advantage. Having lotted it out to the best advantage they say: "In the probabilities of the case and having regard to the sales which have recently taken place here, and the demand in this locality, we consider that of the 100 plots into which we have divided this land five might be sold the first year, and then after they are sold that will bring five or six in another year, and so on." They discount each particular set of plots in proportion to the number of years they think will elapse before they think they can actually be sold, and when that discounting has been done that really brings back the figure
to what would be the best price to be obtained for the single plot of 100 acres or thereabouts. When you come to an agricultural estate of 5,000 acres which is divided into, say, 20 farms, 10 or 12 smallholdings and 40 or 50 cottages and small houses, if that is treated in this way there is no discounting whatever. You destroy the unity of the whole property and you say: "If this property was divided up into all these separate units—farms, smallholdings and cottages—and each is put up absolutely separately, and sold as a separate unit, it might fetch so much." There is no discounting whatever. It actually happened in the case to which my hon. and gallant Friend has referred that a person gave a fair price for the property, broke it up into lots, and resold it, and the original seller, who had sold it in order to pay Death Duties, had to pay Death Duties, not on the price that he got, but on the price that the purchaser from him got when he had broken it up into lots. That seems incredible, but that is what happened. Let us take the imaginary property of 5,000 acres, with a value as a single unit of, say, £20 per acre, which would amount to £100,000. Suppose that by breaking up that estate into separate units and selling it separately you got £120,000. The owner of that property has to pay heavy Death Duties. He cannot pay those duties out of his income. These things are all cumulative, because he has to pay Super-tax, and Income Tax on his income. He cannot pay the Death Duties out of his income. Therefore, he is obliged to sell some part of his property in order to pay Death Duties on the whole of the property. That property is valued, not at the £100,000 as a whole, which it would fetch as a single unit, but at £120,000, which is the break-up value.. He sells part of it and he has to pay, say, £30,000 Death Duties. He sells enough of the estate to realise £30,000. What he has left is not going to be worth the difference between £30,000 and £100,000. He is not going to have £70,000 left when he has taken this property of 5,000 acres and broken it, and sold part of it. It is valued for Death Duties at £120,000, and in order to pay the duties on the £120,000 value he has to sell £30,000 worth of the estate. What is going to be the value of the single unit that is left? It will certainly not
be the difference between £30,000 and £120,000. The State takes its pound of flesh out of the £30,000.
This is not a fair method of assessment. The owner is left in a very unfair and difficult position. He suffers the cumulative effect of this and all other forms of taxation which fall upon landed property, and it probably means that the house has to be shut up, the property has to be broken up, there is loss of taxation and loss of rates, and the evils which this House have already recognised are exemplified from one end of the country to another. I earnestly appeal to my right hon. Friend to look into this matter most carefully and see whether he cannot restore the Proviso of the 1894 Act. It was a wise provision that was inserted in the original Act. We are not asking for anything new. We are not asking for anything for which there is no precedent. Sir William Harcourt, when he imposed the Death Duties in 1894, recognised the position of agricultural property, and this Proviso of the 25-years' purchase on the net income was specially inserted to enable agricultural properties to continue to exist. All that we ask is that the ill-considered repeal of that Provision should now, when its effects have been realised, be put right. Its effects were not realised at the time the Act of 1909–10 was passed. Everybody realises the atmosphere in which that Act was passed. It was a case of "Down with landed property in every direction." The consequences have now been discovered, and this Committee realises that that is not a sound policy from the national point of view. Therefore, the restoration of this Proviso, which was contained in the original Act, would be a sound policy from the national point of view, and 'would remedy the serious mistake that was made in 1909.

Sir L. SCOTT: The two speeches that have been made on this Clause are, of course, well informed, coming from hon. Members who understand what they are talking about better than anybody else in the Committee. Much of what we have been told gives food for thought. I want to state, quite simply, the legal aspect of the matter, what the law is, and what it was, in order that I may correct one or two things that have been said, in which I am satisfied hon. Members were wrong. It is quite true that in the Act of 1894 a
Proviso was inserted in regard to agricultural land, in which 25 times the annual value, or 25 years' purchase of the annual value was to be taken as representing the capital value upon which Estate Duty should be paid. It is not true to say that 25 times the annual value was the standard measure. Twenty-five times the annual value was the maximum.

Mr. PRETYMAN: If there was any value other than agricultural that could be added. Qua the agricultural part of the estate, I think that was the maximum.

Sir L. SCOTT: One difference between its being the standard and its being the maximum was that land which was of a lower value than 25 years' purchase did not pay on 25 years but paid on something lower.

Mr. PRETYMAN: That is quite right.

Sir L. SCOTT: Therefore, the effect of that Proviso was, in the case of agricultural land, that you let off the higher value land seine of its duties, whereas the lower value land had to pay the whole, creating a disparity and, to that extent, an injustice, because a tax should be equal. Inequality of taxation is an injustice as between the owner of the high value agricultural land, which got the benefit, and the owner of the low value agricultural land, which got a prejudice. That was one of the reasons why the Proviso was repealed by the Finance Act, 1909–10. Another reason why it was repealed was that it was thought right that there should be no longer a distinction between agricultural land and other land. The basis of the Act of 1894, the Death Duty Act, is that Death Duty is payable on the market value of the land at the time of the death. It was intended that that should be applied to land, and, indeed, to all property, because, in the case of stocks and shares, they are assessed at their market value. Market value if, of course, merely the real value. Sometimes it is difficult to get at it. Take the case of a building estate. The hon. and gallant Member who moved the Amendment, and the right hon. Gentleman who supported it, said, suite correctly, that the valuation is carried out as a mere matter of valuation practice and fact, and not of law, by seeing how you would sell the estate as at the date of the death, if you were going to sell it to the best advantage. It may be that
that is an inauspicious time to sell. If that is so, the value is got at, not by imagining a sale at that time, when no sensible man would sell, but by postponing, hypothetically, your sale to some future date, when it might be assumed that it would be a suitable moment to sell. In other words, the valuation is got at, as best you can on the facts, by trying to get at what would be the best market value at the time, providing you could get a willing seller and a willing buyer. That is the basis of the whole system of Death Duties.
The Proviso in regard to agricultural land was, no doubt, inserted because of the peculiar fact attaching to agricultural land, which does not attach to other land as a general rule, namely, that the capital value of the land is very often considerably more than its due proportion in ordinary relation to the annual value. In other words, the annual value is measured in some sort of indirect way, and does not represent in any sense the capital value that many are willing to give for agricultural land. The possession of a large estate in the country has a fancy value which commands in the market a high figure. The basis of taxation for Death Duties is, that the State, on the passing of property on a death, takes a toll on a percentage basis of the capital value as it is at the death. That is the principle of the Estate Duties. The view was taken, no doubt, in 1909, that you must apply that rule to agricultural land as to other land. That was the reason why quite deliberately, whether we agree with it or not, Parliament at that time made the alteration. It was said by the right hon. Gentleman that, although the value of a building estate is got at in that kind of rule of thumb or sensible way for the purpose of getting the real value, something different is done in regard to agricultural land. He gave an illustration, which I listened to carefully, but, quite frankly, I found it very difficult to understand it. I have not the least doubt from the fact that he told us that it was so, that it was so.

Mr. PRETYMAN: I did not say something different was done, but I said it had an absolutely different effect.

Sir L. SCOTT: That is not what the Act intends, and that is not the law. If
that kind of valuation is, in effect, carried out, it is not the intention of Parliament.

Mr. PRETYMAN: Hear, hear!

Sir L. SCOTT: The intention of Parliament is to get at the real value, and if you take any hypothetical method which results in a purely fictitious value, it is wrong. It is not law, and the answer to that particular complaint is that it is not the law to-day, and it can be perfectly well put right either by a discussion with the Chancellor of the Exchequer or, if necesasry, by an appeal to the Courts. This Amendment would cost £250,000 or so annually, and at the present time it is a very difficult concession to make. On behalf of the Chancellor of the Exchequer I am not in a position to make the concession asked for. It may be that in a year or two, or in a few years' time, we, as a nation, may be rather better off and may be able to reconsider this matter. The matter is one upon which the arguments in favour of the Amendment are, no doubt, substantial, but at the present time the arguments against it are stronger.

Lord EUSTACE PERCY: I had not meant to intervene, but the speech of the Solicitor-General makes it very difficult for any layman to understand the aim of the Government. He said that if the description now given of the case in question is the fact, it is not the law, and that it can be put right in the Courts. I understand that the case has been taken to the Courts, and has already been adjudicated upon, and that the Courts have pronounced that under the law as it stands a man can be assessed to Death Duties, not on the price at which he sold the property, but on the price that somebody else is able to get for it.

6.0 P.M.

Sir L. SCOTT: The law was that the duties were assessed on the real value, and it was a question of what the value was on the facts stated and the facts found by the Court. In that position there was nothing to prevent, hypothetically, of course, the owner who succeeded to the estate selling it in the kind of way in which it was ultimately sold, and the valuers were entitled to look at that as a. measure of the value showing what the value was at the date of death. The Court does not supervise valuation. It must leave these matters to the discretion
and understanding of the valuers on the two sides for the Inland Revenue and for the estate. The point is that you want to get at the real value, and I cannot imagine for a moment that there is any general case made that in the case of agricultural land valuations are habitually made at more than the land is worth.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Estate Duty.)

Where, on the death of the testator, the property passing has been settled by the will of the deceased or, having been settled by some other disposition, passes under that disposition on the death of deceased to some person not competent to dispose of the property, then, notwithstanding the provisions of Section fourteen of the Finance Act, 1914, the relief from the payment of Estate Duty given by Sub-section (2) of Section five or by Sub-section (1) of Section twenty-one of the Finance Act, 1894 (which relate to settled property), or by Sub-section (16) of Section twenty-three of that Act (which relates to entailed estates in Scotland) shall continue to operate as if Section fourteen of the Finance Act, 1914, had not been enacted.— [Mr. Pretyman.]

Brought up, and read the First time.

Mr. PRETYMAN: I beg to move, "That the Clause be read a Second time."
This Clause raises a point on the same lines as the last. Under the Act of 1894 there was a provision that when a person died and left an estate in settlement, duty should only be paid once on the settlement, and, in consideration of that, additional duty, called Settlement Estate Duty, was levied which was in some sense a composition for that relief. If there is a wish to destroy settlements, then the existing practice is no doubt effective for that object. It is possible that if this Amendment were accepted there may not be any loss of revenue, because all you have got to do is to adjust the Settlement Estate Duty to a point at which it would amount to something like an insurance for the length of the settlement. The position at present is that where you have got property tied up by settlement it is very difficult for the owner to deal with it, and an estate suffers more from Estate Duties, when there are frequent deaths, than if the estate were free. It would be far better for the estate and for the revenue not to go outside the principle of the Act of 1894. It is outside the prin-
ciple on which that Act was based to levy duty except on the death of a person who is competent to dispose. The original wording of the Act is that Estate Duty shall be claimed on the death of a person who is competent to dispose.
The duty is not paid by the successor. It does not in the least depend on the wealth of the man who is going to get the property or parts of the property. It depends solely on the value of the property at the time of the death which was in the hands of the person who was competent to dispose. You have gone outside the principle of that Act and applied the duty to the case of persons who are not competent to dispose. I would suggest that you should go hack to the original principle of the Act. By charging Settlement Estate Duty you can recoup yourself for any probable loss. It really amounts to this, that within a small area, the area of a single settlement, an estate can by paying Settlement Estate Duty insure itself against frequent claims of duty during the currency of the settlement. I hope that the Chancellor of the. Exchequer will have the matter looked into between now and next Session, and legislate for it. This Amendment and the last were put forward so that these matters might be considered.

Sir L. SCOTT: I understand from the speech of the right hon. Gentleman that he is not asking the Committee to adopt the Amendment without a correlative Amendment for the re-introduction of the Settlement Estate Duty.

Mr. PRETYMAN: indicated assent.

Sir L. SCOTT: Also that he is not asking the Committee to accept this Amendment now, but is going to ask leave to withdraw it. The position is this. When the Act of 1894 was passed there was a Provision made in regard to settled property that one payment of Estate Duty should, so to speak, frank the settlement so long as the settlement continued. Or, in other words, until the property passed into the hands of the tenant for life competent to dispose- of the whole of it. But as a corollary to that concession the House of Commons imposed a condition that the settled property should in addition to ordinary Estate Duty pay a second duty called Settlement Estate Duty. That was originally taken at 1 per cent.
Two or three years later it was raised to 2 per cent. That was substantial compensation to the Exchequer for the exceptional treatment of settled land. The proposal now is that that system should be again adopted. To that I say that the House, after very careful consideration in 1914, came to the conclusion that there was no real reason for treating settled property differently from other property, that the course of descent was not often different with settled property from what it is with any other property—sometimes it is, but not often—and, it was felt, that there was no reason for making this difference. There was an additional reason that if there were a difference which in the result, after taking the exception and the additional duty together and setting them off one against the other, inured to the advantage of settled property it was an invitation to settle and escape the general duty. It was for reasons of that kind that the course taken in 1914 was adopted. To adopt the proposal as it stands would cost a large sum of money, probably 4,000,000 a year, though I understand that it is contemplated by the right hon. Gentleman that additional duty should be imposed making up approximately the same sum.

Mr. PRETYMAN: indicated assent.

Sir L. SCOTT: If it is going to make up the same sum it is as broad as it is long, or it should be so. I cannot express an opinion on that, but this year it is impossible, and the right hon. Gentleman does not treat it as possible, to accept the Clause. All he asks us to do is to consider this Amendment, and the last Amendment, and the Chancellor of the Exchequer authorises me to say that between now and next year he will consider the matter, though he must not be understood as making any promise whatever.

Lieut.-Colonel ROYDS: May I ask whether, when a settlement of land is executed now, a stamp duty of 1 per cent. on the value of the property is not payable, while at the time of the Act of 1894 a stamp duty of 10s. only had to be placed on the deed, so that a person now has already paid on the settlement itself an ad valorem duty of 1 per cent. at the time it was settled, and in addition he will have to pay this duty?

Sir D. MACLEAN: What the Solicitor-General said was justified. In reference to the statement that the Government will undertake to give this matter consideration next year I wish to have it placed on record that if the Government do propose to alter this duty next year the proposal will meet with the unmitigated hostility of those who sit on this side.

Sir R. HORNE: The right hon. Gentleman has misunderstood what the Solicitor-General said. He said that we would take the matter into consideration, but no pledge has been given.

Captain W. BENN: What is the exact value which the Government attach to taking the matter into consideration? Nothing at all.

Sir H. NIELD: I rise because of the interruption of the right hon. Member for Peebles (Sir D. Maclean). Surely, if the suggestion be that the duty should be so increased as to make no difference in amount to the Exchequer, and that it is merely a matter of machinery, there is no reason for that warmth in prophesying objection this time next year. When these duties were put on for the first time in 1894 there was science in the way in which they were put on, and there was a scientific assessment. But in 1914, by reason of our profligate expenditure on all kinds of things, we had reached the absolute limit, and morality in taxation had ceased. What was done in 1914 must not be taken as a standard of just taxation. It is simply a terrible record of what a Government situated as that Government was at that time will do. I am not going to inflict on the Committee the iniquities which were perpetrated at that time with regard to land and taxation. It is going rather far to say that because machinery may be altered in a year's time, so as to produce the same revenue, violent opposition is to be offered by the Front Opposition Bench. Perhaps it will form in the interval an electioneering cry.

Sir L. SCOTT: With regard to the increase in the Stamp Duty, may I point out that there was an increase in the Stamp Duty some three or four years ago for War purposes, and that it is still running? It is a small thing.

Lieut.-Colonel ROYDS: I repeat what I said at the time. I said that when the 1894 Act was passed there was only a 10s. duty, whatever the value of the land settled, and that was the only sum payable. Subsequently an ad valorem stamp duty, on the value of the land settled, of per cent. was placed upon it, and is payable now.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Exemption of exhibitions of art societies from entertainments duty.)

(1) Notwithstanding anything contained in the Finance (New Duties) Act, 1916, and the Finance Act, 1917, or the Finance Act, 1919, Entertainments Duty shall not be charged on payments for admission to any exhibition for the promotion and encouragement of the arts of painting, etching, or sculpture, held by a society or institution incorporated for such purposes by Royal Charter or by a society or institution whose sole objects are the promotion of the said arts and whose rules contain provisions that the net profits of such exhibition are devoted to the promotion and encouragement of the general interests and objects of the society or institution holding the exhibition and are not and will not be distributed by way of dividend to any members of such society or institution.
(2) The Commissioners may make Regulations for carrying the provisions of this Section into effect.—[Mr. Ormsby-Gore.]

Brought up, and read the First time.

Mr. ORMSBY-GORE: I beg to move, "That the Clause be read a Second time."
I do so on behalf of the Imperial Arts League, a sort of loose federation of professional artists. They say, and I think rightly, that there are certain glaring anomalies in the way that Entertainments Duty is charged now. The Royal Academy does not pay Entertainments Duty, but the Royal Society of Painter-Etchers does. A large number of the professional artists' societies are exempt, while others have to pay, under the existing law. What the artists feel most of all is that last year this House gave complete exemption from Entertainments Duty to trade shows. That is to say, if the textile manufacturers arranged an exhibition in London of art textiles and things of that kind for sale, they were not charged Entertainments Duty. But the unfortunate artists, who have had a very bad time since the trade depression, have to pay Entertainments Duty
on the large majority of their professional society exhibitions. They feel a double injustice. It is a manifest injustice that the Royal Society of Painter-Etchers should pay the duty, while the Royal West of England Academy at Bristol escapes. I have made every effort to safeguard the Clause against abuses. I do not want to include the exhibition of amateur work or the one-man show. If an artist can get up a one-man show, which is no doubt in the nature of an exhibition, he is in a somewhat different position. I want to confine the proposal to bonâ fide professional societies, which are incorporated by Royal Charter or are limited as to the distribution of any profits they make. As a matter of fact, most of these societies do not make any profit. I have evidence to show that the Royal Society of Painter-Etchers, rather than pass on the tax to the public, pay it themselves, and as a result, the whole of the profits of their exhibitions have been swallowed up. It would be unfortunate for this country if trade shows, motor shows, and things of that kind were exempt, and the higher craftsmanship was penalised. We let off ordinary mercantile exhibitions, but when it comes to etching, painting, and sculpture we come down on them. If my words are not sufficient safeguard, I shall be glad to accept any other words that the Chancellor of the Exchequer suggests.

Sir R. HORNE: I do not resent at all the principle which has been affirmed, and I am prepared to adopt it. I cannot adopt my hon. Friend's Clause as it stands. If he will allow me, I will put down for the Report Stage a Clause which will entirely cover what he desires.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Payment of duties out of capital in certain cases.)

Any Estate Duty which has or shall become payable in respect of lands or chattels settled in the manner referred to in Subsection (5) of Section five of the Finance Act, 1894, shall, notwithstanding anything contained in the Act of Parliament or Royal Grant creating such settlement, be payable out of capital, and the trustees of the settlement may raise such Estate Duty or Succession Duty by sale or mortgage of such lands or chattels or any part thereof.— [Mr. Ormsby-Gore.]

Brought up, and read the First time.

Mr. ORMSBY-GORE: I beg to move, "That the Clause be read a Second time."
This is concerned with what are known as Parliamentary settled estates. I believe there are about fifty or sixty of these in the country. The object of the Clause is to enable such estates to pay Death Duties out of capital. If I succeeded to my father's estate, I should be able to pay out of capital, because it is not a Parliamentary settled estate. Parliamentary settled estates are debarred by law from paying out of capital. There is a glaring case now under consideration in my constituency, and that is why I am moving this Clause. I refer to the Shrewsbury estate, which is the subject of a law suit. If the will of the late Lord Shrewsbury should stand, that estate, being a Parliamentary settled estate, passes to his grandson, who is a small boy, and the Death Duties on the whole property will have to be paid out of that settled estate. The Death Duties are such that if they are to be paid out of income, and the capital cannot be touched, the whole income for the next 11 years will be taken up, and there will not be one farthing to educate or feed that boy. Further, there will be no money whatever to pay two jointures, one for the wife of the previous owner of the estate and the other for an aunt. As these Parliamentary settled estates are so restricted and the Death Duties are now so high, it is essential that we should give them the same sort of freedom as other estates. There will be no money for repairs or for the adequate maintenance of the estate. The whole of the income and the rents will be taken for 11 years and the property will deteriorate in the most lamentable way, and will affect many persons besides the eventual owners of the estate. In the interests of the agricultural dependants on this estate I hope that the Chancellor of the Exchequer will accept the new Clause. I have put it down in two alternative forms. The second form, which appears later on the Paper, has been drafted by a skilled Parliamentary agent who tells me that it effects my object in somewhat more cumbersome language. Even so, there may be verbal alterations required, as to which only a Treasury expert can advise.

Sir R. HORNE: I prefer the second of the two alternative forms put down by
my hon. Friend. Both effect precisely the same result, but to my legal mind the second is more apt to achieve the purpose than the first.

Mr. ORMSBY-GORE: Do I understand that the Government will accept the second?

Sir R. HORNE: Yes.

Sir F. BANBURY: I am sorry the Government propose to do that. Hard cases make bad law. The argument for altering the settlement which was made under the authority of an Act of Parliament is that in one special case hardship might arise.

Sir R. HORNE: That case was only an illustration. It could happen in any other case.

Sir F. BANBURY: It might. As a matter of fact, as far as I know, it has not happened in any other case. What was the object of the settlement in this case? The object was to preserve the property. The last owner has been rather foolish and he has spent money in a way which the person who settled the estate certainly did not contemplate. Because he has done that, and in order to relieve the estate, it is proposed that part of the estate shall be taken away in order to pay Death Duties, instead of the proper course being adopted, namely, that the Death. Duties be paid out of income. I think my hon. Friend must have been guilty of exaggeration when he said that there would be nothing left for the owner of the property. The proper course would be to ask the Inland Revenue authorities to extend the payments over some years. We do not want to encourage people to spend capital in order that they may have a pleasant time in the next few years. They must be impressed with the fact that they must have bad times and must save money if the country is to be resuscitated. The result of acceptance of this Clause might be that the present owner's son might say, "I will pay the Death Duties from what is left of the property," and in two or three lives you might have nothing left at all. In the end the property would have disappeared. I view with great apprehension the passing of these estates. As things stand at the present moment, it is almost impossible, with the Death Duties and the enormous taxation, for
the owners of these historic estates to maintain them. The only possible way is by rigid economy on their own part, and I think a great many of them are exercising it. It would be very serious if all these great estates, with all the advantages which they have conferred upon the country, were to be dissipated. After all, the land-owning class has done a great deal for England. Is it to be wiped out of existence in order that some persons at the present moment may enjoy a pleasant time? Some alteration should be made in the law which would prevent estates being continued in the hands of such persons, and would place them in the hands of someone of rather stronger mind. I do not know whether the Chancellor has considered these points, but I put them before him in all seriousness, and I believe, in what he is going to do now, he is making a great mistake.

Sir R. HORNE: I considered very carefully all the points which the right hon. Baronet has put forward, before this Clause came on the Paper at all. The matter has been impressed on my mind, having been brought to my attention in its most extreme form by the case to which my hon. Friend the Member for Stafford (Mr. Ormsby-Gore) referred. I agree with the right hon. Baronet who spoke last that one of the elements of the stability in this country has been the preservation of the old landed properties. I would point out, however, to the right hon. Baronet that the principle with which he was dealing has already been given away by the House, and the right hon. Baronet has been a Member of it for a long time. I do not know whether he raised his voice in this matter on previous occasions, but we have this anomaly to-day, that while there are some 50 Parliamentary estates in the whole country, the great mass of estates in the country are in another category and are what I may describe as ordinary settled estates. What is the fact in regard to them? It is that, the estate duty may be paid out of the corpus of the estate. In fact, only an infinitesimally small part of the estates of England come within the Clause with which we are now dealing. So far as the great mass of the estates of the country are concerned, what the right hon. Baronet asks for has already been given away. It is no good trying to shut the door upon this comparatively small portion of the country's
estates. I think it is preserving an anomaly at the present time which we really should not suffer, especially if in doing so we are also to create great embarrassments, not merely to the individuals chiefly concerned, but to every person who resides upon the property.

Sir H. NIELD: I think the somewhat ungenerous speech of the right hon. Baronet the Member for the City of London (Sir E. Banbury) requires that some facts should be placed upon record to correct the impression which the right hon. Gentleman evidently intended to create in regard to the particular ease referred to. It is not a question of people having a good time now, as he said. It is a question of getting a fair subsistence to provide for the maintenance and education of the grandson who is the next heir. I wish briefly to tell the Committee that the income of this particular estate is, roughly speaking, £30,000 a year, and when the outgoings of Income Tax, which amount to £9,000 in the current year 1921–22, and the first instalment of Estate Duty, amounting to £18,730, have been paid, there will be a nominal surplus—without any allowance for the maintenance of the estate or making good the ordinary ravages of time—of £2,250. In the following year the Income Tax amounts to £15,750, the second instalment of Estate and Succession Duty to £18,750, and this, with interest on the unpaid duties at 4 per cent., turns that £2,250 surplus into a deficiency of £3,552. So there is an absolute deficiency upon the accounts of the estate without reference to any repairs or maintenance, and nothing to provide maintenance and education for the infant. In the following year the deficiency amounts to £5,536, and so on until in the year 1928–9 the deficiency in the aggregate will have amounted to £34,000. Taking into consideration the incidence of other duties which have to be provided for, there is a total deficiency of £37,350, and not, a penny to pay the jointure of the widow of the late Earl whose son died—not a fraction to pay for the two jointures that are chargeable upon the estate, and nothing to provide for the maintenance and education of the infant. I wish those facts to be placed on record in the OFFICIAL REPORT in order that the speech of the right hon. Baronet may be controverted to that extent.

Sir F. BANBURY: I am glad my hon. Friend has read extracts from the accounts of the estate. They show the ruinous effect of the enormous taxation which is being imposed at the present moment. They do not do away with my argument that what we ought to do in the dreadful state to which the country has been brought owing to this enormous taxation, is to endeavour to save money and not to endeavour to get out of ruinous taxation by getting rid of our capital. I may point out to my hon. Friend that I suggested the proper way of dealing with cases of this kind, was to approach the Inland Revenue authorities and ask them to allow the payment of death duties to be spread over a longer period. I cannot believe that the Inland Revenue authorities would refuse, as they have allowed the payment of other duties to be spread over an extended period. As to what the Chancellor said, it is quite true that in the case of the ordinary settlement this is allowed, but the particular settlement referred to is not an ordinary settlement. It is a special settlement made under Parliamentary powers, and it is rather a new thing if, when people have gone to the trouble of getting a special Act of Parliament in regard to these settlements, the special Act of Parliament is to be set aside because there are other cases where the people concerned have not gone to the trouble and expense of netting a special Act. I am much obliged to the hon. Member for Ealing (Sir H. Nie1d) for the extracts he has read, which show in a lurid light the position in which we are at the present moment.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Appeals to the Special Commissioners.)

Section one hundred and forty-eight of the Income Tax Act, 1918, which provides that appeals in certain cases may be made to the Special Commissioners instead of to the General Commissioners, shall apply also to an appeal against an assessment made under the rules of Schedule E as amended by this Act.—[Mr. G. Locker-Lampson.]

Brought up, and read the First time.

Mr. G. LOCKER-LAMPSON: I beg to move "That the Clause be read a Second time."
This is a result of Clause 12, which the Government have included in the Bill. Under Clause 12 the Chancellor of the
Exchequer has transferred a great many people from Schedule D to Schedule E. This Clause suggests that all persons transferred from Schedule D to Schedule E shall have the right of appealing to the Special Commissioners instead of the General Commissioners. Under Schedule D there is a right of appeal to the Special Commissioners, but under Schedule E the only right of appeal is to the General Commissioners. That did not really very much matter under the former system, because Schedule E only comprised a comparatively small number of people—employés of the Government, of Corporations and of companies, and it only applied really to the chief employés in those three categories. Now it is proposed to transfer to Schedule E practically all the employés even of private employers, so that in the future Schedule E is going to comprise a very large proportion of the population of this country. I do not believe the General Commissioners are really qualified to deal with a great many of the appeals which will arise. After all the General Commissioners are appointed by the Land Tax Commissioner; they are very often local people, and generally know nothing whatever about Income Tax law. With the exception of some parts of Wiltshire and the City of London, referred to by my right hon. Friend the Member for the City of London the other day, in most parts of the country the General Commissioners have no expert knowledge. They are entirely in the hands of the local Inspector of Taxes. They are local people, and very often an appellant does not like his private affairs to be known by his neighbours who are General Commissioners. He would prefer that his appeal should be dealt with by people entirely outside his own locality whom he can trust not to pry too much into his private affairs. All I am asking the Chancellor of the Exchequer to do—the right hon. Gentleman has not listened to one single word I have been saying. May I, on a point of Order, Sir Edwin Cornwall, ask, if the Minister in charge does not really pay the slightest attention to what a speaker is saying, if it is possible to repeat the whole of one's speech over again?

The DEPUTY-CHAIRMAN (Sir E. Cornwall): I am sorry the hon. Member should think that his remarks have not received sufficient attention.

Sir R. HORNE: I do not apologise, because I have been listening to all that the hon. Member has said. It is possible sometimes, and even necessary, for a Minister to be getting information from the Bench behind and yet to listen to what is being said by an hon. Member who is addressing the Chair, and I am rather surprised at the hon. Member's reproach because, indeed, it was not deserved.

Mr. LOCKER-LAMPSON: I quite realise that the Chancellor of the Exchequer has treated the Committee with great courtesy throughout the Debate. I hope I have made myself clear that I want to give these people who have been transferred to Schedule E from Schedule D the right to maintain the privilege, which they have had in the past of appealing to the Special Commissioners, if they so desire, instead of to the General Commissioners.

Sir R. HORNE: In order to show that I fully appreciated the speech of the hon. Member, I may say that I approve what he has said and am prepared to adopt his suggestion, but not in the precise words which he has put on the Paper. If he will allow me, I should like to bring up another Clause dealing with the point on the Report Stage.

Mr. LOCKER-LAMPSON: I very much appreciate the kindness of my right hon. Friend, arid what I said before was not, of course, in any way personal.

Sir W. DAVISON: I understand it is the ruling of the Chair that a Clause in my name on the Paper, which I have put down at the instance of the Income Tax Payers' Society, and which is on somewhat the same lines as that now before the Committee, cannot be discussed when we come to that point, but must be dealt with now?

The DEPUTY-CHAIRMAN: In the event of the Clause now before the Committee being withdrawn, that does not prejudice the hon. Member on a later Clause, but there is no reason why he should not put his point now, in order to save, the time of the Committee.

Sir W. DAVISON: I will shortly put the point to the Chancellor of the Exchequer. My Clause is rather a wider one than that of the hon. Member for Wood Green (Mr. Locker-Lampson), and it simply provides that, notwithstanding
anything in the Income Tax Act, 1918, except in the case of railways, which are in every respect dealt with by the Special Commissioners, every appeal against any assessment to Income Tax or Super-tax may be made to the Special Commissioners or to the General Commissioners, at the option of the taxpayer. At the present time a company, firm, or individual assessed by the General Commissioners can appeal either to the General Commissioners or to the Special Commissioners, as he or they think fit, but a company, firm, or individual assessed by the Special Commissioners must appeal to the Special Commissioners and cannot appeal to the General Commissioners. All that I ask is that this anomaly should he removed and that there should be a right of appeal to either the Special Commissioners or the General Commissioners in either case. It is a very simple and reasonable point, and I hope the right hon. Gentleman will see his way to agree to it. It is very much desired by the Income Tax Payers' Society, whose attention has been drawn to it by a large number of persons, and as it will cost nothing I hope the Chancellor will agree to it.

Sir R. HORNE: I am sorry to say that I cannot, as at present advised, agree to what my hon. Friend has suggested, for, as he said, his Clause is very much wider than that now before the Committee. It would include every possible assessment, including assessments under Schedule A, which at present I should not regard as at all suitable for appeal to the Special Commissioners, and accordingly I would suggest to my hon. Friend that he should not insist on this matter now, but should wait until his Clause is called and make his Motion then, and I will perhaps have an opportunity in the interval of considering if by any chance I am able to meet him.

The DEPUTY-CHAIRMAN: I think we had better understand that this question, having been raised now, cannot be raised again.

Sir F. BANBURY: On a point of Order. I understood my hon. Friend the Member for South Kensington (Sir W. Davison) only got up in deference to a statement from the Chair, and as the Chancellor expressed a desire that he
should make his statement when his Clause comes on, would it be possible for the Chair to allow it?

The DEPUTY-CHAIRMAN: It would be possible, but, having regard to the large number of Amendments on the Paper, and the fact that the subject-matter has been before the Committee, I only intended to indicate, for the convenience of the Committee, what I thought would happen.

Mr. LOCKER-LAMPSON: I understand the Chancellor has accepted my Clause in principle. Would he like me to withdraw it now?

Sir R. HORNE: I would prefer that the hon. Member should withdraw it now, in order that it should be put on the Paper on the Report stage in a form which we could approve.

Mr. LOCKER-LAMPSON: Then I will ask leave to withdraw it.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of 10 & 11 Geo. V, c. 18, Section 18.)

Section eighteen of the Finance Act, 1920 (10 and 11 Geo. V., c. 18), shall be read as if after the words "the claimant," in the first line thereof, there were inserted the words "if a widow, or."—[Mr. Cautley.]

Brought up, and read the First time.

Mr. CAUTLEY: I beg to move, "That the Clause be read a Second time."
The Royal Commission on Income Tax did its work so well that I feel a little temerity in asking the Committee to reconsider one decision at which it arrived. The point of my Amendment is this. As the Committee is aware, every married man and woman who are living together are entitled in the assessment for Income Tax to a free allowance of £225 a year. Every single man and single woman in the assessment of Income Tax are allowed only a free assessment of £135, or £90 less, and then the Royal Commission provided, and the Finance Bill founded on that Report provided, that a widower and a widow should be treated exactly in the same way as if they were single. The result is that a widow is only entitled to a free allowance in the assessment of the tax upon her of £135, in place of the £225 which they had got
when her husband was alive. So far as a widower is concerned, I think that is a perfectly right and proper decision, but, so far as a widow is concerned, it seems to me to raise a very grave hardship, and this is a point of very great importance in principle, because it applies to every widow in the country who pays Income Tax. It is hardly necessary to point out that as soon as a woman becomes a widow, in the ordinary case, except where they are living on unearned incomes, the whole of the revenue of the household, so far as it is earned by the breadwinner, the husband, disappears, and it is just at that time, when the obligations on the woman become so heavy, when she is left with her family and her children to educate, and the bulk of her means of livelihood is taken away, that the Income Tax gatherer steps in and says, "We will make the tax harder on you than it was when your husband was living, and when you had his income to draw on to pay the tax."
I put this before the Committee as a very grave hardship indeed, and I have raised the matter because from my own constituency I have had so very many glaring cases of it, and so many widows who are placed in this unfortunate position and who suffer from it writing to me about the hardship of their particular case. It will be obvious to the Committee that on the husband's death, where there are children, the whole expenses of the household remain practically the same. Of course, if the husband's earned income is a large one, the widow may have to go into a smaller house, but the trouble and cost of education and the expenses connected with her family remain just the same. In the case of a widower it is different, because his income continues, he is able to go on with the same house, and he has the same income pretty well as he had before, but with this very serious reduction in income, it is extremely hard on the widow. I commend this Clause, therefore, to the Committee as being right. I have been unable to find any ground of this particular finding of the Royal Commission, and I cannot imagine that there can be any real objection to this Amendment. I have little doubt the Chancellor will say that he cannot afford the money, but to my mind that is no answer where there is a grave case of hardship on people
who cannot protect themselves who are left in this unfortunate position. My new Clause is, I think on consideration, drawn too widely, and I would be very glad, if the right hon. Gentleman will ameliorate the hardship of this case, that it should be limited to those widows who are left with children under the age of 21 years.

Sir R. HORNE: The hon. and learned Member for East Grinstead (Mr. Cautley) has made a very strong appeal for the consideration of this particular case, but I have to remind the Committee, as I have had to remind them so often, that the whole scheme of the Royal Commission on Income Tax involves the interrelation of all its parts, and if you begin to make an alteration in this particular case, I am quite certain it will be impossible to resist a consideration of other cases as well. If my hon. and learned Friend has been listening to the Debate in this Committee during the last two days, I am sure he will recognise that other cases just as hard have been put from the Benches opposite and from the Labour Benches and that there is no possibility of differentiating between the embarrassing conditions in which some people are situated. To my mind, if we were to grant what is asked in this particular instance we should immediately rip up very many of the provisions which have been made as a result of the considerations of the Royal Commission.
7.0 P.M.
Let me state what the particular position is. A widow is put in the same position, in regard to the allowance granted, namely, £135 a year, as is a widower, a spinster, or a bachelor, even although the spinster or the bachelor may have people who are just as much dependent on them as are the children of a widow upon her. Infinite cases could be brought up, to my certain knowledge, of a character just as impressive as the case which my hon. Friend has presented. The suggestion is, that the widow should get £225 a year allowance in the same way as if her husband were still alive. In most cases, no doubt, the husband is a source of support to his wife while he is there; in many cases he is not. If you begin to talk about hard eases, you could immediately conceive of a case, which might be presented to raise a particular situation, in which a wife is living at home
with her husband and where, so far from being a help, that husband is an embarrassment. So, if a widow is entitled to get an allowance of £225 a year, how much ought she to be allowed if she has got to support her husband? There would be no answer to such an argument. You must draw the line somewhere. We should give the scheme of the Royal Commission a fair chance of operation for a period which will give every opportunity for a discussion of its merits and not begin, when it has been so shortly in operation, to make changes in it. This proposal would cost the Exchequer £250,000 a year. For that, amongst the other reasons I have suggested, I do not think the Clause can be accepted.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Delivery of Increment Value Duty particulars.)

As from the commencement of this Act, such parts of Section four of the Finance (1909–10) Act, 1910, as were not repealed by Section fifty-seven of the Finance Act, 1920, shall be repealed.—[Mr. Pretyman.]

Brought up, and read the First time.

Mr. PRETYMAN: I beg to move, "That the Clause be read a Second time."
I hope the Chancellor of the Exchequer will see his way to accept this Clause, which will cost nothing to the Exchequer, and will save a very heavy expenditure to a large number of people in this country. The Committee will remember that in the Finance Act, 1910, a duty called Increment Value Duty was proposed. In order to facilitate the collection of that duty, it was enacted that everybody who sold land or who leased land for a long term of years should present particulars to the Inland Revenue showing the price which they had obtained, and a great many other details which required very careful drafting and which entailed a great deal of expense and trouble. The Committee will also remember that that Increment Value Duty was repealed last year, but, for some reason which I have never been able to understand, the enactment that these particulars were to be presented still remained in force. I now suggest that that enactment should also be repealed. Figures show that the solicitors' costs for presenting these particulars amount to over £500,000 a year.
An hon. Member, who is not here at the moment, but who said he would be present to support the Clause, told me that he had had in one case 1,100 similar conveyances to pass through, and the only cost and trouble in connection with those conveyances was the presentation of these figures. In the ordinary case, the charge of a solicitor for preparing and presenting these particulars amounts to £1 11s. 6d. It used to be £1 1s., but it has now been increased to £1 11s. 6d. I believe some cases are done more cheaply, but the average cost is about £1 1s., and that amounts to over £500,000 in the whole, which is a pure waste of money.
It has been suggested that the presentation of these particulars may be of use to district valuers in valuing for Death Duties. I hope that defence will not be put forward, because it is far from being the case. These particulars are really of no value whatever for Death Duty purposes. On the contrary, they are very misleading, because all the particulars given here are those of completed transactions, without any record whatever of the circumstances and motives in which those transactions were carried out, and without any record of attempted sales which did not take place. That is a very important matter in the market. A valuer or a surveyor in a district, who is considering what the capital value of any particular piece of land or house may be in that district, at any given moment, would have regard not only to a few successfully completed sales, which might be at a high figure for special circumstances personal to the vendor or the purchaser. He would have regard to the whole state of the market, and to such sales as had been attempted and had failed. Further than that, particularly in these times, everybody is aware of the very rapid fluctuations which take place in the value of property. It runs up and down, and I unhesitatingly say that any competent valuers, such as those on the panels and those who have to assess the value of property for Estate Duty, would only be hampered in considering Death Duties if they were given these particulars of sales. He would be in a much better position to value if he were left perfectly free to ascertain the whole of the circumstances available.
Suppose that the Increment Value particulars did give him an advantage.
Is it fair that a special advantage given to the people who are valuing for the State apart from those who are valuing for the individual? Why should particulars be available to the person valuing for the State which are not available to the man who is valuing for private individuals? This is a most wasteful provision. If the Exchequer were getting this money it would be a very unfair tax, but at any rate it would go to the revenue. Here is a tax, imposed by the State, of over £500,000 a year on a particular form of property, at a time when it is passing through greater difficulties than any other form of property, from which the revenue authorities derive no benefit whatever. I hope I am knocking at an open door in this matter, for I cannot think that the Chancellor of the Exchequer has any desire to maintain this particular imposition. If it is not going to be withdrawn I shall press my Clause to a division, because it is very important that this unnecessary tax should be withdrawn. I sincerely hope that my right hon. Friend will see his way to accept the Clause.

Sir L. SCOTT: The primâ facie case for the Clause seems a strong one, yet I hope I shall be able to satisfy the Committee that the reasons in favour of retaining this system of delivering particulars of transactions in land are good ones and are much stronger than those in favour of abolishing it. Let me deal with the figure of the alleged cost of £500,000 a year in payments to solicitors incidental to carrying out this obligation. That estimate was arrived at by the right hon. Gentleman who moved this Clause by assuming that, for each set of particulars delivered, the solicitors concerned charged £1 1s. He has taken the number of transactions, which occurred under the absolutely abnormal conditions of 1920, as representing the average number of transactions in a year, upon which this charge of £1 1s. has to he paid. Before the War, the number of transactions during the year was under 200,000, and this year the figure is comparable with that. Even if solicitors were ad infinitum, to continue to charge £1 1s., the figure would be 200,000 guineas in the average and not 500,000 guineas. If we look at the charge, it merely means this, that where a sale is effected some small fee has to be paid in order to let the appropriate Department of the Govern-
ment know the details of the transactions. In past years, say 15 years ago, it was an extremely difficult thing for the Government to know what the position really was in regard to transactions in land.

Mr. LINDSAY: Why should they know?

Sir L. SCOTT: There are very many reasons why they should know. It is very desirable that the Government, in taxing land, should know the details. This House often thinks it right that land should be acquired for public undertakings of one sort or another. It is very desirable, when land is acquired for public purposes, that the price paid for the land should not be in excess of its fair value. It is not a bad principle that the same value should be applicable where a. tax has to be paid by the owner of the land and where money has to be paid to the owner of the land for the acquisition of it. [HON. MEMBERS: "Hear, hear!"] I am glad to note approval of my sentiments in quarters where they are not always supported. It is of great public importance that we should have sonic system of knowing what is fair value of land, both for purposes of taxation and of acquisition. In order that we may know what the value of land is it is very desirable that the Valuation Department and the Government should be in possession of the necessary information.
Before I deal with what is necessary by way of information for the Valuation Department, I want to say a word upon that Department. I had occasion to make particular inquiry into the Valuation Department over a series of years. I came to this conclusion—I say it with all deliberation—that that Department to-day contains a very competent staff. At one time, we know, there were a large number of persons engaged in the Department—in the early stages, a good many years ago I do not want to rake up the embers of past controversies—some of whom, to be perfectly frank about it, were not competent. During the War I had the privilege of acting as Chairman of a Committee appointed by the Prime Minister to consider a number of questions relating to the acquisition and valuation of land. It was upon one of the reports of that Committee that the Acquisition of Land (Assessment of Compensation) Act, 1919, was based. Another report produced the
Law of Property Bill, which awaits the Royal Assent, I think, to-morrow. But in connection with these subjects of valuation and acquisition, we made a close and critical inquiry into the working of the Valuation Department, and of the work of the valuers of that Department, to see whether they were competent or not., and the unanimous testimony of the independent experts—we had three or four on my Committee—was that they did their work extremely well. I got similar evidence from several of the Departments, particularly the Admiralty and the War Office, and the result was that we came to a very strong conclusion that they were a very useful Department, and saved the public a very great deal of money by the excellence of their valuations and the cheapness at which they were done. The Committee on National Expenditure presided over by the right hon. Baronet the Member for the City of London (Sir F. Banbury), in their 5th Report, expressed approval of the Valuation Department, and that opinion was concurred in by the Geddes Committee.
That being so, I venture to submit that we ought to approach the question from the point of view of accepting as a premise that the Valuation Department is a useful item of Government machinery, which tends to economy, and saves the public money. From that point; of view I want to approach this question. That Department cannot function properly unless it be supplied with the kind of information which is contained in what are called "particulars delivered," under the Finance (1909–10) Act, 1910, and, in order to enable that Department to function properly, it is essential to maintain the delivery of those particulars. The records of the Department as to the details of land upon which it is enabled to form its opinion as to the value of land have been maintained now continually for a series of years. To break the continuity would be, in effect, to multiply many times over the work that would have to be done at some future date to enable valuers to get the information necessary to form their opinion. When the Law of Property Bill comes into operation on the 1st January, 1925, these particulars delivered will become very much simpler, and the solicitor's costs involved in them will be smaller. I doubt very much then whether it will be necessary to employ solicitors
for these particulars, and, consequently, the cost will fall to a comparatively small figure. Even to-day a copy of the document will do just as well as the particulars delivered under the Section of the Act, and the cost will thereby be substantially reduced.
Lastly, I want to say—not on the merits, with which I have dealt pretty fully—that the House considered the matter very fully in 1920. The then Chancellor of the Exchequer dealt with it, and insisted that the Valuation Department must be retained, and that these particulars were essential to its successful and efficient functioning. The House at that time accepted that view. Incidentally, I may add that under the Acquisition of Land (Assessment of Compensation) Act, 1919, there are several purposes for which the Valuation Department ought to be used, and has been and is being used. I ask the Committee to say that these various reasons are sufficient for resisting this new Clause.

Sir D. MACLEAN: The learned Solicitor-General has stated quite correctly that this matter was fully debated in 1920, when the present Leader of the House was Chancellor of the Exchequer, and the argument which he then adduced in favour of the retention of this special piece of machinery has been strengthened, I think, by the experience of the two intervening years. It has been suggested to me that there is a sentimental interest in the retention of this machinery, in so far, as it is the sole remaining bit of salvage of the wreck of the land policy of the Prime Minister, and serves to mark the burial place, with, I hope, a lively prospect of resurrection, some day or other, of the whole scheme. But that is not the object with which I rise to support the position taken up by the learned Solicitor-General. There is no doubt at all that this Department does serve a really useful purpose. To begin with, it is useful for the valuation of assets on death. By the preliminary examination of valuations you can arrive at the market value on or about the time of decease much more easily. In the second place, as the learned Solicitor-General pointed out with very great force, you have here an estimate. Market value, of course, is a very difficult thing to define, but, at any rate, you have an estimate of what is the
value of property at a time when a public authority seeks to acquire that property for public purposes. Whether it be a railway company, or a local authority's undertaking of any kind, there is this most useful basis of valuation. Machinery was set up by this Government in 1919 for the acquisition of land for various public purposes, and there is no doubt at all that this Valuation Department has been of real service in this connection.
There is one interesting point to me, as belonging to another branch of the profession from that of my hon. and learned Friend. It is, that the official representatives of solicitors are very willing to forego the fee of which, I understand, they have been in receipt while this thing is in operation, amounting to about £200,000 a year. I think the Solicitor-General was perfectly accurate in saying that there is nothing like the enormous amount of business in land that there was in 1920, and that it is much more likely this year to be about the general average, namely, £200,000. The objection taken by solicitors was that the details asked for were unnecessarily prolix, and that particulars were sought which were not really useful. I had a good deal to do with an effort with the Chancellor of the Exchequer in those days and some representative solicitors, to simplify the form. The form has been very much simplified since. I think it can be further simplified quite easily, and, as to the fee which is charged, it might be reduced quite usefully to one-half. The thing becomes a matter of mere machinery. The real point was that they were after a lot of details which were quite unnecessary. To the extent which they cut down these unnecessary details, provided the important information is obtained, I think all cause of grievance is removed, and this most useful basis of valuation, or rather information, on which ultimate valuation is based, ought, in the interest of the general community, to be maintained.

Sir H. NIELD: I have listened to the exordium which has fallen from the right hon. Gentleman. I can well understand it. Indeed, if there were any cat in the bag, it was let out when he said that they desired to obtain this in view of future developments. He said it was a very useful Department. We know it has been a useful Department. It was most useful in 1909–10 to enable the right
hon. Gentleman and his friends then on the Treasury Bench to pay a number of political debts by the appointments they were able to make. That I am able to know, because I was asked to undertake an investigation at that time of those very appointments, and I could show to this Committee, were I to have access to my reports and dossier, some very startling appointments that were made. Of course, it is very useful. It has cost the country £5,000,000, which has been a dead loss. That is far from, a sentimenkal reason for continuing it, and I am, of course, not surprised to find that unity of purpose prevailing between the learned Solicitor-General and the Opposition Bench. May it continue. It is the very surest evidence that the time must come when there must be a change here.
But let us see precisely what is meant by this. My hon. and learned Friend who is always so sympathetic and affable that it is always difficult to pick a bone with him, has said that this is most useful information. I venture to think the information he gets on this form is of no practical value at all to those called upon to value land. If I may say so respectfully and kindly, my hon. and learned Friend has got a bee in his bonnet on this particular subject. He has been chairman of a Committee dealing with the acquisition of land, and he has been chairman of other Committees of investigation. Further, he had a very large hand indeed in the production of that monstrous Bill—I say "monstrous" from the point of view of size—the Law of Property Bill. It is part and parcel of the argument of my hon. and learned Friend that it is under the operation of that Bill that they will be able to make use of this Department. I thought the Department was scrapped; that it had been set aside as a useless thing; that it was produced for purely party purpoes, and it had to be scrapped. It is a great surprise to me to find it still in existence. Of course, my hon. and learned Friend the Solicitor-General thinks it has justified its existence, and is producing a profit. I should very much like to know whether he can give any specific instance which would stand the test of cross-examination, in which the Exchequer has really derived material advantage on a question of value as apart from the work of the valuers and the information on the
land and in relation to the particular estate in question. No! I think we may safely conclude, those of us who have moved this new Clause, and those who have sympathy with our action, that there is a great deal of arrière pensée about this.
I hope that those who have already, that is the general taxpayers, paid this five millions of money that has been lost in the operations of this Department, will take note that this Government declines to remove it, and is quite willing that the cost of it should go on; quite willing that those who are constantly aggravated by this constant requirement for official particulars should continue to be. Some of us—solicitors and others—arc never without a form to be filled up. When that Budget, about which I have really to restrain myself when I speak—when that Budget which has been responsible for all the mischief and all the evils that have followed—[An HON. MEMBER: "The War!"] Oh, no, but for this Budget there would have not been that bargain with hon. Members who sit opposite, and we should not have had the troubles on the other side of the Irish Sea. I pass from that. But it is very unpopular to mention some of these matters. It is rubbing salt into the wounds. I finish with that. But I venture to say that what was clone then has proved to be a disastrous failure and has riled the general public. I refer to Form IV and all the other mischievous forms pronounced illegal after great expenditure had been incurred upon the actions. All this shows the mockery of the whole business, and I am surprised the Government to-day should offer one word in justification for the retention of this Clause.

Lieut.-Colonel ROYDS: A similar proposal to the present was made in the House last year. I was rather surprised to hear the speech of the right hon. Gentleman the Member for Peebles (Sir D. Maclean), because I have a recollection that last year he took part in the Debate, and I understand that while there would be some difficulty in removing this Department then—that was last year—there would not be the same difficulty in a year hence—that is now. After I had spoken the right hon. Gentleman got up and said that he had had great difficulty in coming to any decision on the matter, but, after hearing what I said, he thought I was a
practical person, and he had decided to support the proposal to keep this department on. I, myself, do not know how the matter stands with him now, for he made a very different sort of speech this evening. I am speaking from memory entirely, but I think what I say is fairly accurate.

Sir D. MACLEAN: Assuming the hon. and gallant Gentleman is correct, I remain convinced by his arguments of last year.

Lieut.-Colonel ROYDS: I, at any rate, support the removal this evening, and for this reason: I thought it was reasonable, seeing we had such short notice last year, that the work might be continued for another year; but there is no excuse whatever now, for no reason can be given to justify the continuance of this Department. It is only a waste of money. Whether a man is dealing with a lease or a sale or with a matter of £500,000 or £50, the tax is all the same. We have just passed a Law of Property Bill to facilitate and to cheapen the transfer of land. I pointed out at the time that Stamp Duty was one of the great costs in the transfer of land, and here is another Government tax. It is a tax on every person, great or small, dealing with land, whether of the value of £50 or a rental of only 10s. There is no justification whatever for continuing it or making it permanent. The whole scheme should be scrapped.

Major BARNES: I do not know whether the hon. and learned Gentleman the Member for Ealing (Sir H. Nield) has handled the dossier to which he referred. If he has I have been wondering whether my name was in it, because I received one of the appointments at the time that this Department was formed, and I spent some eight years in it; so I may perhaps be credited with some little knowledge as to the value which the Department attaches to the particulars and the value which they in fact receive from them. I must confess that in the early years of this Parliament, following the time when the right hon. Gentleman the Prime Minister achieved his great victory—for it was a great victory, and it came as the result of one of the most wonderful pieces of organisation which this country has known—and I congratulate him—I did wonder why these particulars were left, why this small remnant of the scheme had been
left. I suppose it is sonic sort of final thank-offering, a souvenir which the Prime Minister cherished of his Land Valuation Department. My mind went back to a story narrated in a well-known book of another David who, when a fierce lion came down upon his flock and seized a lamb, if I remember rightly, snatched an ear of the lamb out of the mouth of the hon. I thought that probably these few particulars represented, so to speak, the ear of the lamb, and the remnant which the Prime Minister had taken from a once large Department.
I am not without some sympathy with the position taken by those who want to get rid of these particulars. What is advanced on their behalf? The argument is, and it is perfectly true, that these particulars do keep the Valuation Department in touch with the market value. As a Department, they are not per se entrusted with any power of negotiation for the purchase and the sale of property. I think it might be truly said that if they do not get these particulars that they would be remote from a knowledge of the market values. Against that it might very fairly be argued if that is se it is not the business of private individuals to educate a Government Department at private expense. That, I understand, is the point. If this Department is to be kept informed, kept up in its work, that should not be done at the expense of private individuals. I am bound to say that there is a good deal for that case. But what has the House to consider? It has to consider this: First of all, has this Department, to be kept on? Members who think that it ought not to he kept on are entirely consistent in that view in supporting the proposed Clause, because if the Department is no use, informed or uninformed, it is no use asking the people to spend half a million upon it.
So far as we can judge it is the general sense of the House that it should continue. When the House got rid of the duties, they decided to keep the Department, and I believe everybody and every Committee that has investigated this Department has come to the conclusion expressed by the Solicitor-General, that it was a good Department, efficient, that its services were valuable and should be retained. My hon. Friend the Member for Consett (Mr. A. Williams) I believe has had opportunities as a member of the
Committee on National Expenditure of going into this point, and I think he is prepared to add his confirmation to what has been said by the Solicitor-General. If that be so, if it be that this Department is one worth retaining, that it is to the advantage of the State in its dealings with matters arising out of the transfer of property that we should have a Department of this kind, it follows that such Department must be maintained at its most efficient level. As the policy of the Government comes up at the present time it should be said there is no other way of maintaining this Department in a position to render the service which it can render, than that at present adopted, of supplying it with particulars of every transfer of property which takes place.
It is not all loss, I think, even to those individuals who resent this charge and its services, because I think nobody would be readier than my right hon. Friend the Member for Chelinsford (Mr. Pretyman) to admit that if there are to be conflicts of opinion between surveyors representing private interest and surveyors representing the Government in connection with Death Duties and matters of that sort, it is of value that those Government surveyors should be as well-informed as possible. I do not think anything has ever been said derogatory to the efficiency of the Department. General surveyors who have come in contact with the Department and have had to negotiate with them, have paid tributes to the efficiency of these civil servants. That is the position. So long as the Government maintains its present policy, or not engaging the members of the valuation staff in the actual sales and the actual negotiations with regard to the sale of land, the only way to inform them is to supply them with the particulars. If not, they had better scrap the Department. If they are going to maintain the Department they must continue to feed it.
There is, however, a way in which I think the desire of hon. and right hon. Gentlemen opposite might be met. I will trouble the Committee a very few moments with the matter, but I refer to a change in the method of employing the Department—a change set forth in the Report which is published by the Committee on Crown and Government Lands. This Report was issued only two or three days ago, and it represents the opinion of a Committee consisting of a number
of very distinguished surveyors. The chairman was Sir Howard Frank, a gentleman who holds a most distinguished place in his profession, and who has been entrusted with the most responsible task ever allotted to a surveyor in this country. Sir Howard Frank was supported by a number of gentlemen to whom the Chancellor of the Exchequer will be ready to testify as to their ability. They include Sir Frederick Ponsonby, Mr. E. G, Strutt, Sir John Stirling Maxwell, Sir N. F. Warren Fisher, and Sir John Hubert Oakley. They reported:
We have been informed that of existing public Departments the Board of Inland Revenue—in virtue of its controlling a valuation branch with local offices throughout Great Britain—is regarded as the proper Department for undertaking all valuation work for the Government (other than that connected with the winding up of certain War transactions), but that it is not considered desirable to place on that Department the responsibility for purchase, sale or management of lands, etc.
While this Department is employed for the purposes of valuation, it is divorced and kept separate and apart for the responsibility in regard to the purchase, sale or management of land. That is not dealing with the real thing, and it is not actually engaged in the purchase, sale or management of land. In their recommendations on page 9, the Committee described the procedure involved on a purchase or sale, and they come to the conclusion that:
It follows from this that purchases and sales involve at every stage the advice and active intervention of a professional valuer if the work is to be satisfactorily performed, and a divorce between valuation and dealings in land is seen to be purely artificial.
That is the position at the present time, because there is actually a divorce between valuation and dealings in land. You get that divorce at the present time. The Committee further report:
We therefore regard it as axiomatic that a qualified professional staff should he available for advising Departments in regard to valuations, purchases and sales, etc., of real property,
Therefore they recommend that a valuation Department should go on, and that there should be a qualified special staff of valuers engaged by the Crown. The Report continues:
and for the actual conduct of negotiations, and we cannot adopt any suggestion that valuations should or can be separated from purchases and sales.
I suggest that the Report of this Com-
mittee is entitled to great weight, and that the Government should give it consideration. I for one would be perfectly willing to agree that when this change took place the supply of these particulars should cease, but I do feel that as long as the Government maintain this artificial division between their valuation staff and their land staff this is the only way in which they can bridge it. For these reasons I cannot support the Amendment as it stands.

Mr. CAUTLEY: Both the Solicitor-General and the right hon. Gentleman the Member for Peebles (Sir D. Maclean) agree that these particulars are required, but for a totally different purpose to that for which they were ordered by the Act of Parliament under which they are delivered. It is extremely difficult, to my mind, to justify the continuation of this heavy burden on a particular class of the community for a purpose entirely different from that which was intended. The only argument in support of their continuance is that the valuation staff is used for other purposes, and that this staff should be informed of the sales of land. I know it is very desirable that the valuation staff should have these particulars, but why should a special section of the community have to supply them and at its own cost? I waited to see what answer the hon. Member for Newcastle (Major Barnes) would give to his own question, but he ran away from it, and never gave any reasons, and the Solicitor-General has not given any reason why the cost of these particulars should be put on the landowners and they be compelled to supply information for a purpose not connected With themselves.
Why do the Government not pay for this information in the usual way instead of leaving particular landowners to supply it and pay for it? The costs have been put at £500,000 or about £480,000, and this is really an average of the transactions for the three years 1919–20–21. A charge of one guinea has been taken in arriving at these figures, but my experience shows that one guinea is by no means sufficient to cover the charges incurred. No layman could supply these statistics himself, and if they could, particulars supplied by laymen would not be accepted by the Department. Why should this
particular class of people be taxed in this way for supplying information which, in many cases, will never be used at all Evidence as to the value of land five or 10 years ago is of no use as to the value of that land at the time when the inquiry is being made.
For another reason there is no ground whatever why the landowners should continue to deliver these particulars. I have always regarded it as being of the utmost political value to the State that we should in every way cheapen the sale of land and make it easier to transfer it, and yet the learned Solicitor-General brings in the Law of Property Bill, which for the next twenty years is going to increase the cost of the sale of land. The Solicitor-General is now insisting on the supply of these particulars. This again is only adding to the cost of every transaction that takes place, and whenever we have a Finance Bill that can put more taxes on the conveyance of land, we do so. Already the heavy stamp duty on the conveying land adds very materially to its cost. For these reasons I shall go into the Lobby against the Government, because I consider these particulars are quite unnecessary, and it is a gross injustice to a special section of the community.

Mr. ROSE: I should not have intervened in this discussion but for the remark made by the hon. and gallant Member for East Newcastle (Major Barnes), who referred to the now defunct Committee on National Expenditure, of which I also was a member. The hon. and gallant Member referred to the hon. Member for Consett (Mr. A. Williams) as the one person who would be ready to confirm the generally expressed approval in that report of the continuance of this Department. I believe the Committee did report in favour of continuing the Department, and that is why I have got up to speak, because members of a Select Committee cannot make a Minority Report, and therefore the only thing I can do now is to utterly dissociate myself from that Report. It is common knowledge that those Reports are written by the President, and I believe the Chairman of the Committee is backing this resolution, and to me that seems quite inconsistent. I have nothing in common with the right hon. Gentleman who has moved this Clause, and I have no particular sympathy to waste on landlords. However, I can assure my right hon. Friend that,
if he takes this proposal to a Division, in order to express my utter disapproval of the continued existence of this utterly useless Department I shall give myself the unqualified pleasure of following him into the Lobby.

Mr. FOOT: I know that this new Clause has been discussed at considerable length, and I shall not stand for many minutes between the Committee and a Division. I only wish to express an opinion about the particulars which are now being demanded for the passing of every conveyance. I was astonished to hear that the supplying of the particulars for every conveyance meant a tax upon the landowner. That may be so in London and some parts of the Provinces, but, generally speaking, it is a tax simply upon the legal profession upon their time and patience, and it is included in their charges. The suggestion made by the Law Society as to the payment of one guinea has not been generally followed throughout the country. This practice is a great hindrance to easy conveyancing, more particularly in those parts of the country where we have no stamping office at our disposal. What happens is, that the conveyancer has to send his documents by post, and has to postpone the actual conveyance for many days, because of requirements which are far more complicated than is necessary.
8.0 P.M.
I associate myself with what was said by the right hon. Member for Peebles (Sir D. Maclean), namely, that it is a fair thing to ask all owners of land or owners of houses when they sell their property to give particulars of the amount at which

they sell. That is a reasonable requirement on the part of the State, but it is not reasonable to put owners of land and sellers of property to unnecessary inconvenience, delay and trouble in the passing of their property. It ought to be possible to devise some perfectly simple form that should give the authorities the particulars of the transaction and the considerations in respect of which the property passed. The present system, causes unnecessary trouble. It holds up conveyancing unduly. It hinders that facility of conveyancing which the Solicitor-General professed so strong a desire to promote in the course of the discussions on the Law of Property Bill. It would give me some help in the casting of my vote if I could get an undertaking that the Government would reconsider the forms and methods adopted so as to secure the real purpose, and at the same time take from the shoulders of the profession an unnecessary burden in the filling up of manifold forms.

Sir L. SCOTT: I believe a simplification has already been effected, and if any further simplification be possible, obviously it should be carried out.

Mr. FOOT: We want to prevent the holding up of the conveyancing.

Sir L. SCOTT: If there be any hindrance in that respect, it should be removed, and that matter shall be looked into at once.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 69 Noes, 172.

Division No. 184.]
AYES.
[8.5 p.m.


Beckett, Hon. Sir Gervase
Harmsworth, Hon. E. C. (Kent)
Pownall, Lieut.-Colonel Assheton


Bell, Lieut.-Col. W. C. H. (Devizes)
Herbert, Col. Hon. A. (Yeovil)
Ratcliffe, Henry Butler


Bellairs, Commander Carlyon W.
Herbert, Dennis (Hertford, Watford)
Remnant, Sir James


Bennett, Sir Thomas Jewell
Hinds, John
Richardson, Lt.-Col. Sir P. (Chertsey)


Bowyer, Captain G. W. E.
Holbrook, Sir Arthur Richard
Roberts, Samuel (Hereford, Hereford)


Bruton, Sir James
Hood, Sir Joseph
Rose, Frank H.


Bull, Rt. Hon. Sir William James
Hope, Sir H.(Stirling & Cl'ckm'nn,W.)
Royds, Lieut.-Colonel Edmund


Burdon, Colonel Rowland
Hope, Lt.-Col. Sir J. A. (Midlothian)
Shaw, William T. (Forfar)


Burn, Col. C. R. (Devon, Torquay)
Hopkins, John W. W.
Starkey, Captain John Ralph


Cairns, John
Inskip, Thomas Walker H.
Steel, Major S. Strang


Campion, Lieut.-Colonel W. R.
Jackson, Lieut.-Colonel Hon. F. S
suttees, Brigadier-General H. C.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Jodrell, Neville Paul
Terrell, George (Wilts, Chippenham)


Churchman, Sir Arthur
Johnson, Sir Stanley
Townley, Maximilian G.


Clay, Lieut.-Colonel H. H. Spender
Morrison, Hugh
Ward, Col. L. (Kingston-upon-Hull)


Colfox, Major Wm. Phillips
Morrison-Bell, Major A. C.
Weston, Colonel John Wakefield


Cope, Major William
Nall, Major Joseph
Wheler, Col. Granville C. H.


Courthope, Lieut.-Col. George L.
Nicholl, Commander Sir Edward
White, Col. G. D. (Southport)


Edgar, Clifford B.
Nicholson, Brig.-Gen. J. (Westminster)
Wilson, Col. M. J. (Richmond)


Finney, Samuel
Nicholson, William G. (Petersfield)
Windsor, Viscount


FitzRoy, Captain Hon. Edward A.
Nield, Sir Herbert
Wolmer, Viscount


Fraser, Major Sir Keith
Norris, Colonel sir Henry G.
Wood, Major Sir S. Hill- (High Peak)


Ganzoni, Sir John
Percy, Lord Eustace (Hastings)



Gritten, W. G. Howard
Perring, William George
TELLERS FOR THE AYES.—


Hall, Lieut.-Col. Sir F. (Dulwich)
Poison, Sir Thomas A.
Mr. Pretyman and Mr. Cautley.


NOES.


Adkins, Sir William Ryland Dent
Hannon, Patrick Joseph Henry
Richardson, R. (Houghton-le-Spring)


Agg-Gardner, Sir James Tynte
Harmsworth, C. B. (Bedford, Luton)
Roberts, Rt. Hon. G. H. (Norwich)


Armitage, Robert
Hayday, Arthur
Robinson, S. (Brecon and Radnor)


Baird, Sir John Lawrence
Hayward, Evan
Roundell, Colonel R. F.


Banton, George
Henderson, Lt.-Col. V. L. (Tradeston)
Royce, William Stapleton


Barker, G. (Monmouth, Abertillery)
Hennessy, Major J. R. G.
Sanders, Colonel Sir Robert Arthur


Barlow, Sir Montague
Hopkinson, A. (Lancaster, Mossley)
Scott. A. M. (Glasgow. Bridgeton)


Barnes, Major H. (Newcastle, E.)
Horne, Sir R. S. (Glasgow. Hillhead)
Scott, Sir Leslie (Liverp'l. Exchange)


Barnston, Major Harry
Hurst, Lieut.-Colonel Gerald B.
Seddon, J. A.


Barrand, A. R.
Irving, Dan
Shaw, Hon. Alex. (Kilmarnock)


Bartley-Denniss, Sir Edmund Robert
Jephcott, A. R.
Shortt, Rt. Hon. E. (N'castle-on-T.)


Barton, Sir William (Oldham)
Jesson, C.
Simm, M. T.


Birchall, J. Dearman
John, William (Rhondda, West)
Stanley, Major Hon. G. (Preston)


Bowerman, Rt. Hon. Charles W.
Johnstone, Joseph
Stanton, Charles Butt


Breese, Major Charles E.
Jones, Sir Evan (Pembroke)
Stephenson, Lieut.-Colonel H. K.


Briant, Frank
Jones, G. W. H. (Stoke Newington)
Strauss, Edward Anthony


Bridgeman, Rt. Hon. William Clive
Jones, J. T. (Carmarthen, Llanelly)
Sturrock, J. Leng


Bromfield, William
Jones, Morgan (Caerphilly)
Sugden, W. H.


Buckley, Lieut.-Colonel A.
Kellaway, Rt. Hon. Fredk. George
Sutherland. Sir William


Carr, W. Theodore
Kenyon, Barnet
Swan, J. E.


Carter, W. (Nottingham, Mansfield)
Kidd, James
Taylor, J.


Casey, T. W.
King, Captain Henry Douglas
Thomas, Sir Robert J. (Wrexham)


Chamberlain, N. (Birm., Ladywood)
Law, Alfred J. (Rochdale)
Thomson, F. C. (Aberdeen, South)


Clough, Sir Robert
Lawson, John James
Thomson, T. (Middlesbrough, West)


Cobb, Sir Cyril
Lewis, Rt. Hon. J. H. (Univ., Wales)
Thorne, G R. (Wolverhampton, E.)


Colvin, Brig.-General Richard Beale
Lewis, T. A. (Glam., Pontypridd)
Thorpe. Captain John Henry


Coote, Colin Reith (Isle of Ely)
Lloyd, George Butler
Tickler, Thomas George


Cory, Sir J. H. (Cardiff, South)
Locker-Lampson, Com. O. (H'tlngd'n)
Tryon, Major George Clement


Cowan, D. M. (Scottish Universities)
Lowther, Major C. (Cumberland, N.)
Wallace, J.


Curzon, Captain Viscount
Macdonald, Rt. Hon. John Murray
Walsh, Stephen (Lancaster, Ince)


Dalziel, Sir D. (Lambeth, Brixton)
McLaren, Hon. H. D. (Leicester)
Walters, Rt. Hon. Sir John Tudor


Davies, A (Lancaster, Clitheroe)
McLaren, Robert (Lanark, Northern)
Walton, J. (York, W. R., Don Valley)


Davies, Thomas (Cirencester)
Maclean, Rt. Fin. Sir D. (Midlothian)
Ward-Jackson, Major C. L.


Dawson. Sir Philip
Mallalieu, Frederick William
Ward, Col. J. (Stoke-upon-Trent)


Doyle, N. Grattan
Malone, Major P. B. (Tottenham, S.)
Ward, William Dudley (Southampton)


Edwards, Allen C. (East Ham, S.)
Manville, Edward
Watts-Morgan, Lieut.-Col. D.


Edwards, C. (Monmouth, Bedwellty)
Marks, Sir George Croydon
White, Charles F. (Derby, Western)


Edwards, Major J. (Aberavon)
Middlebrook, Sir William
Wignall, James


Entwistle, Major C. F.
Mond, Rt. Hon. Sir Alfred Moritz
Wild, Sir Ernest Edward


Evans, Ernest
Moore-Brabazon, Lieut.-Col. J. T. C.
Williams, C. (Tavistock)


Eyres-Monsell, Com. Bolton M.
Moreing, Captain Algernon H.
Williams, Col. P. (Middlesbrough, E.)


Falls, Major Sir Bertram Godfray
Mosley, Oswald
Wills, Lt.-Col. Sir Gilbert Alan H.


Fell, Sir Arthur
Murchison, C. K.
Wilson, Rt. Hon. J. W. (Stourbridge)


Fisher, Rt. Hon. Herbert A. L.
Murray, John (Leeds, West)
Wilson, Joseph H. (South Shields)


Foot, Isaac
Myers, Thomas
Wintringham, Margaret


Galbraith, Samuel
Neal, Arthur
Wise, Frederick


George, Rt. Hon. David Lloyd
Newbould, Alfred Ernest
Wood, Hon. Edward F. L. (Ripon)


Gibbs, Colonel George Abraham
Newman, Sir R. H. S. D. L. (Exeter)
Wood, Sir H. K. (Woolwich, West)


Gilbert, James Daniel
Norton-Griffiths, Lieut.-Col. Sir John
Wood, Major M. M. (Aberdeen, C.)


Gilmour, Lieut.-Colonel Sir John
Parry, Lieut.-Colonel Thomas Henry
Worsfold, T. Cato


Glyn, Major Ralph
Pease, Rt. Hon. Herbert Pike
Worthington-Evans, Rt. Hon. Sir L.


Gaff, Sir R. Park
Pennefather, De Fonblanque
Yeo, Sir Alfred William


Goulding, Rt. Hon. Sir Edward A.
Pilditch, Sir Philip
Young, W. (Perth & Kinross, Perth)


Green, Joseph F. (Leicester, W.)
Preston, Sir W. R.
Younger, Sir George


Greene, Lt.-Col. Sir W. (Hack'y, N.)
Prescott, Major Sir W. H.



Greenwood, William (Stockport)
Purchase, H. G.
TELLERS FOR THE NOES.—


Guest, Capt. Rt. Hon. Frederick E.
Rae, Sir Henry N.
Colonel Leslie Wilson and Mr.


Hacking, Captain Douglas H.
Rendall, Athelstan
McCurdy.


Hallas, Eldred
Renwick. Sir George

NEW CLAUSE.—(Amendment of 10 and 11 Geo. V., c. 18, Sch. 2, par. 4.)

Paragraph 4 of the. Second Schedule to the Finance Act, 1920, shall have effect with the substitution of the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a duty of five shillings is chargeable, used solely in connection with agriculture "for the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a. duty of five shillings is chargeable, used for haulage, solely in connection with agriculture."—[Lieut.-Colonel Sir J. Hope.]

Brought up, and read the First time.

Lieut.-Colonel Sir J. HOPE: I beg to move, "That the Clause be read a Second time."
It is directed to allowing the farmer to have his motors at the lower duty which the House of Commons intended they should get them. Paragraph (4) of Schedule 2 of the Act of 1920 reads:
Locomotives, ploughing engines, tractors, agricultural tractors, and other agricultural engines not being engines or tractors used for hauling on roads any objects except their own necessary gear, threshing appliances, farming implements or supplies of fuel or water required for the purposes of the vehicle, or for agricultural purposes—5s.
I am leaving out the words "for haulage" in order that the £6 duty only may be charged as was intended by this House in regard to motors used by farmers in their business. It is a very interesting point, I admit, but I do not think the word "haulage" was put in by Parliament with any intention. As a matter of fact I imagined it was intended that the small motors used by farmers should be charged at the cheap rate of £6 instead of the £21 which the Minister of Transport now endeavours to charge. I should like to refer to a case recently fought out between a. farmer and the Ministry of Transport in which this point was raised. In the first place the justices gave a decision in favour of the farmer, but the Minister of Transport appealed and the case came before Mr. Justice Darling, who, in giving judgment, held that as the locomotive was not used for haulage only it was liable to a charge of £25. In the case of this vehicle it had two small hooks at the back which enabled it to be used for hauling, and Mr. Justice Darling had to decide whether these two hooks were so used. I should think this House, when it considered this matter, did not go into this very intricate point, but simply desired that the farmer using the motor for the purposes of tillage on the land and generally for the work of the farm should have the benefit of the reduced licence. I hope the Minister of Transport will accept my Amendment. It will give the farmers a concession which I believe Parliament. intended to be given to them. Farmers use the roads very little compared with the heavy rate they have to pay, and surely this is a very small concession to make to the agricultural interest, which is so badly hit by the heavy rates, and which, in these difficult times, has had very little help from Parliament, seeing that the only Act which was intended to give it real help has been repealed.

It being a Quarter-past Eight of the Clock, and there being Private Business set down by direction of the Chairman of Ways and Means under Standing Order So. 8, further Proceeding was postponed without Question put.

Orders of the Day — PRIVATE BUSINESS.

AYR BURGH (ELECTRICITY) BILL [Lords>]. (By Order.)

Motion made, and Question proposed, "That the Bill he now read a Second time."

Mr. ALEXANDER SHAW: I beg to move to leave out the word "now," and at the end of the Question to add the words "upon this day three months."
Although I shall try to be very brief, in moving the rejection of this Bill, I think it is due to the House, as I am taking a somewhat unusual course, that I. should endeavour to make out a case. This is a Bill which comes from another place, and since the Bill came before the Committee of the House of Lords, the whole situation with respect to the supply of electricity in the county of Ayrshire has undergone a radical change. I shall inform the House in a moment what that change has been. May I say, first, what this Bill is and what it seeks to do, and, in the second place, what are the main objections to it? The Bill contains a scheme to procure electrical power by draining Loch Doon, which the House will remember in another connection, and which is situated some 16 miles away from the Burgh of Ayr. The scheme is necessary, in the opinion of the promoters, in order to provide additional electricity for the Burgh of Ayr. The present electrical installation is of an extremely extravagant kind and very limited in its output. The present price of electrical energy, for power purposes, as apart from light and heat, charged by Ayr is about:3½d. per unit, as against 1½d., which is charged by the neighbouring installation of Kilmarnock. One very amazing feature of this Bill is that it actually seeks power to increase this already exorbitant charge which Ayr levies upon its consumers, and it is a singular commentary upon the promises of the promoters of an economical supply that they should find it necessary, in order to carry out their scheme, to provide in the Bill for charges on an even more extravagant basis than the charges already in operation.
In view of the nature of the evidence of authorities on this subject, the power which they seek, to charge a still higher rate, is a wise precaution. They seek to
set up, on an acre of ground only, an installation, using water power, of a capacity of 3,000 kilowatts, and I must at the outset tell the House that, although that is the maximum capacity of the installation proposed, it is an extremely small capacity, and it is not the continuous capacity. In the view of eminent authorities, the continuous capacity, which is really the point in this matter, is some 600 to 700 kilowatts. The cost of installing this new Loch Doon scheme is to be in the neighbourhood, as they estimate, of, £250,000, but I am informed by those who have gone into it that it is much more likely to be £400,000, or even £500,000. Taking it at £250,000, and taking the very extravagant estimate of 3,000 kilowatts, it works out at £80 per kilowatt; and, on the basis of a continuous supply, at an enormously enhanced figure, namely, several hundred pounds per kilowatt. The state of affairs in the Burgh of Ayr, so far as I can find out from the documents available, is that the present population of! the town is somewhere in the neighbourhood of 33,000, and an estimated cost of £250,000 for the scheme is a very serious burden on a burgh of those dimensions. Naturally, the, large users of electricity in the Burgh of Ayr are somewhat apprehensive about the matter, and they have actually presented a petition in the other House against this Bill, to which they are still opposed.
The large users of electricity in the neighbourhood have petitioned against this Bill, and the fears that they entertain have been in no way met. The large users of electricity look rather to a large and comprehensive scheme than to a small and highly expensive local scheme. They look to a large scheme of a kind which will embrace the needs of the whole industrial area of Ayrshire. The remarkable thing about this Bill is that, although this Loch Doon scheme is being fought and persisted in, there is actually available at the present moment a large, comprehensive, and wonderfully economical scheme at their own doors, which, as I submit to the House, would render this Loch Doon scheme absolutely unnecessary. What is that large and economical scheme? It is a scheme situated at the pit's mouth at Kilmarnock, a scheme which now enables fuel, which would be otherwise unsaleable, to
be used at a very low cost indeed. The present price that is being paid in Kilmarnock is from 5s. 3d. to 8s. 6d. per ton, and, I think, if I may say so, that it is a little unfair of those who are responsble for Ayr's case to indicate, in the statement which they have circulated to members, that the Loch Doon scheme will show an economy. The attempt to do that rather broke down before the Committee, for it was demonstrated that their figures were based upon a coal cost at the very top of the market—namely, 30s. or more, whereas to-day the cost is from 5s. 3d. to 8s. 6d., and is expected still further to go down. I am not exaggerating when I say that the Kilmarnock scheme—which is not only a burgh scheme, as I shall point out—is unsurpassed by any undertaking in the country, and it is an absolute fact, which cannot be controverted, that it is the most economical scheme in Scotland. The costs are lower than in any other place in Scotland. The total capacity of the Kilmarnock scheme at present, although it can be very greatly enlarged, is 22,500 kilowatts, and the actual output that is possible now is 38,000,000 Board of Trade units per annum.
Naturally, the large users of electricity in Ayr, as in other parts of the country, look to a supply from Kilmarnock, and so we find that in the year 1920 negotiations took place between the Town Council of Ayr and the Kilmarnock undertaking. I will not go into those negotiations further than to say that the town council of the Burgh of Ayr visited the Kilmarnock undertaking and inspected their works, and were very much impressed by what they saw. There were certain proceedings there in which refreshments were served. I think a luncheon was held. The town council, as I am informed and believe, unanimously decided to take their whole supply from Kilmarnock. Kilmarnock had ordered a 10,000 kilowatt machine to supply the expanding needs of this great industrial area which they serve, and they turned that into a 12,500 kilowatt machine and actually bought it, acting in good faith, on the understanding which has been arrived at, and installed it and it is there now, capable of supplying all the needs of the Burgh. The difference between the two machines cost Kilmar nock £8,000. The House will be able to compare that capital expenditure of
£8,000, which is, of course, a generating expenditure and does not include the mains, which would be in addition, with the enormous expenditure and deadweight of debt which would be incurred by the totally unnecessary scheme embodied in the Bill. That is what Kilmarnock did. They acted in good faith. They acted on that understanding and installed the machinery and it is available.
What did Ayr do? Someone, I do not know whether he was an engineer or a contractor, suggested Loch Doon, and they found it convenient to discontinue the settlement of the details, which alone remained to be put right before the agreement could be executed, and in a spirit of local patriotism, which is very fine if confined within its proper scope, said, "We will not be beholden to Kilmarnock or any other authority. We will have a patriotic scheme, and will go to Loch Doon and see what we can do there."

Mr. R. McLAREN: Honest men!

Mr. SHAW: Misguided and fanatical, but perfectly honest. The town council were far from united on the subject. There was a good deal of pretty hot correspondence in the papers, and there were two parties in Ayr. The situation reminded me very much of what we read in the papers recently about a certain horse. A man was brought up at the police court for working a horse when it was not fit, and very curious veterinary evidence was given, because it was proved, to the mystification of the magistrate, that this was a very peculiar horse. Its front legs badly needed rest, but its hind legs required exercise. That was really the position of the Town Council of Ayr. There was, both in the council and among the ratepayers, a very strong party which said, "Now is no time to launch out into this enormous expense. Give us rest." Those behind cried forward, but those in front cried back. Still they came up with this Bill. Every burgh wants to have its own supply, but economic factors step in as the use of electricity widens, and the economy of providing electricity on a large scale is now generally realised. So it comes about that Kilmarnock is now not on its own as an independent burgh, but is working hand in hand with the county council of Ayr with a view to a joint scheme. I am sorry to see in the promoters' statement a paragraph which can only be intended to leave upon
the minds of Members the impression that the county council of Ayr were in some way favourable to this scheme. That is entirely contrary to the facts. The clerk to the county council is here and denies that. He is here not as the county clerk, but on behalf of the joint authority.
Since the Bill came in the whole situation has completely changed. There were three stages in the change. There were first negotiations. On 12th May there was made on behalf of Kilmarnock to the town of Ayr what I call an extremely fair offer, offering, if the Joint Board, as seemed likely, was brought into operation, to make arrangements to include Ayr Burgh in the Joint Board and give it extremely favourable treatment. That was the first stage. The second stage was a special meeting of the Ayr County Council on 14th June. The County Council has no possible axe to grind in this matter. It has no purpose whatever to serve except to proceed upon the best evidence which it can obtain and to get electrical power from the cheapest possible source, and they unanimously resolved, after considering the whole matter, without a single dissentient voice, that the Ayr Burgh scheme was not good enough and that their duty on behalf of the county was to enter with the Burgh of Kilmarnock into a joint electrical board on the basis of the existing Kilmarnock works, which it would be possible in the future greatly to extend. I see from the report in the "Kilmarnock Standard" that Mr. Turner, a very eminent county councillor, who seconded this resolution, which was proposed by Mr. Jack, said the Committee of the County Council and their electrical expert were satisfied that Ayr could never under any conditions, whether they got their Order through the House of Commons or not, be able to supply electricity, either for lighting or for power purposes, nearly so cheaply as Kilmarnock could supply it. One may prophesy and one may promise, but if it comes to the hard test of the market, there you have the opinion of the man who is a purchaser of electricity, and you have that man choosing the tested and tried scheme which has proved to be economical and rejecting the other which his experts advise him will be extravagant. That complete change has taken place. The Town Council of Kilmarnock unanimously endorsed the proposal for a Joint Board, giving up in the
general public interest their own independence and taking a wider view of the necessities of that great industrial area as a whole. This project for a Joint Board has been welcomed and endorsed by the Electricity Commissioners. The Burgh of Ayr have been invited—and the invitation has been renewed—to come and share the control of the Joint Board and the benefits of the economical supply of electricity, which is assured, and indeed which is actually available at present. If there should be any merits in the Loch Doon scheme, which I am informed is very doubtful indeed, to say the least of it, the Joint Board are quite prepared to carry it out. They have an open mind. All they want is a cheap source of supply, and if they carry it out, instead of the ratepayers of this comparatively small town of Ayr being burdened with an enormous cost they will have lifted off their shoulders a great portion of the capital cost.
In view of the whole situation, and particularly of the negotiations and the agreement reached within the last few weeks since the matter was before the other House, it would seem most undesirable that the very considerable expense of attendance, perhaps for many days, by Counsel, with expert witnesses brought from Scotland, before the Committee should be undertaken. The electrical needs of a great industrial area like Ayrshire are not neatly divided up by burgh or parish boundaries. The problem is much wider than that, and this House, in the legislation which was passed in 1919, recognised the necessity for a wider outlook and a more comprehensive provision for the needs of industrial areas as a whole. This Board, which has been formed within the last few days, includes in its purview the whole of the County of Ayrshire, including the burghs therein. That agreement creates a new situation, and it would be very unfortunate if, right in the middle of the natural area of the new Joint Authority, there was set up a little separate scheme without hope of expansion. Admittedly there is no hope of expansion, because there is not enough water in Loch Doon for the scheme to expand. At the best, this scheme will prejudge and prejudice the action of the new Joint Board. The Town Council of Ayr is in itself divided about the wisdom
of this expensive scheme, while the division amongst the community of Ayr is still more acute.
It is somewhat remarkable that in a matter of this kind, involving an extremely heavy addition to the dead-weight debt of the Burgh, the ratepayers have never been consulted. There exist the means of doing that, but the Ayr Council have thought it wiser not to consult the ratepayers. They have not consulted the ratepayers either by ballot or by plebiscite. Therefore, I ask this House, before further great expense is incurred, to reject the Bill, if only, in view of the new situation, to give time for consultation, not in the heat of controversy, but in a quiet way, between the representatives of Ayr, the representatives of the County of Ayrshire, the Kilmarnock Authority, and the Joint Board, so that a scheme may be worked out for the advantage of Ayr itself, in co-operation with all the local authorities concerned. I ask the House to reject this scheme, which will hamper the larger provision which is required.
May I sum up the matter briefly? On the one hand, on the side of Kilmarnock, you have an understanding acted upon by Kilmarnock in good faith. On the other hand you have its repudiation. On the one hand you have machinery actually installed and ready to supply the town of Ayr, installed for the purpose and for the only purpose, of supplying the town of Ayr. On the other hand you have plans and promises of contractors and engineers. On the Kilmarnock side you have a moderate capita] cost for the generation of electricity and the supply for Ayr ready and available now, while on the other hand you have this vast burden of liability falling on the Ayr ratepayers. On the one hand you have the scheme of Kilmarnock, tested by experience, and found to be—I challenge anybody to deny it—the most economical in Scotland. On the other hand, you have promises of economy, and prophecies by engineers, some of whom are not without an axe to grind. On the one hand, you have a scheme at Kilmarnock sought for its economy and tried efficiency by the whole of the areas of the County of Ayr, while in the Ayr Burgh Bill you have a scheme which is shunned by the County, and feared because of its possible and probable enor-
mous expense. On the one hand, you have the large view of the area, which unites the area as a whole. On the other hand you have the narrow view, which insists on the sectional treatment of a problem which is not a sectional problem, but which is a problem of a much wider scope. On the, one hand, you have the offer to Ayr of association in a Joint Board, and its resultant economy. On the other hand you have the advisers of my hon. Friend the Member for Ayr Burghs (Sir G. Younger) insisting on squandering in the bogs of Loch Doon a quarter of a million sterling, which is sorely needed for other purposes, on a scheme which is totally unnecessary, and which I ask the House to reject.

Mr. R. McLAREN: I beg to second the Amendment which has been so ably proposed by my hon. Friend the Member for Kilmarnock. When I interjected the remark about honest men, knowing Ayr and Ayrshire very well, I had the suggestion in my mind of the lines
Honest men and bonnie lasses.
Hence the reason why our hon. Friend the Member for the Burgh represents it. In connection with the Loch Doon scheme, I trust that if it goes on, they will be more successful in carrying out the operations than they were in the past. During the time that the scheme was in operation, they set a man to take charge of machinery, and the man who had charge of the machinery, locomotives, was a tailor from London. In the course of operations he forgot to keep sufficient water in the locomotive boilers, and he fused a plug, and in order that he might stop up the hole, he put in a wooden plug, and had the fire underneath. In connection with this scheme, the whole matter rests upon two principal objects. Those of us who have read the evidence must have come to the conclusion that the two principal purposes for carrying out the scheme are those of the civil engineer and the electrical engineer. I have carefully read the evidence of the civil engineer, and I am bound to say that unless something better is substituted than has been suggested, I fear the whole scheme will become a miserable failure. It must be understood that the civil engineer and the electrical engineer are two component parts that cannot be separated, and if the civil engineer fails
in his duty to adopt a proper plan, it is impossible for the scheme to be successful.
I notice in the Loch Doon scheme that it has been suggested that the amount to be spent will be £220,000. In looking over the table, I find that the figure for labour and supervision is very much underestimated. Too few men are allowed for carrying on a continuous shift of eight hours, which means three shifts in the 24 hours. Too few men are allowed for carrying that work on continuously and successfully, and I assume that the figure of £1,760 per annum for carrying out this work and keeping it going is short by at least £500 or £600. I also find in connection with repairs and maintenance that only 1 per cent has been allowed. Anyone who knows anything about the question would never dream that 1 per cent. is sufficient. To that extent the promoters of the Bill are very far wrong. In connection with this scheme some matters have been properly brought out in cross-examination. The engineer who had charge of the scheme had to admit that in order to get a water supply and to have a continuous supply for continuous work during the whole year it was necessary to raise the dam at least 5 feet, and that he estimated would cost £11,500. That was not taken into account in the first estimate.
I am sure that the cost will be at least £250,000, and perhaps a good deal more. In this matter I am afraid that the estimate has been far too sanguine. Some figures were given in this respect which will interest the Committee. I find, in connection with the electrical power, that the cost of generating 5,641,000 units on an alternating current, required for the Ayr scheme, takes 1,800 kilowatts to carry out, and the cost is given as 89 of one penny. When you take into account the under-estimated items to which I have referred, the cost really amounts to 98 of one penny. If you take the Kilmarnock scheme, then you find that in Kilmarnock we have got plant sufficient to give a very much cheaper rate. Taking the same number of units, we find that the cost amounts to only 77d., and as the output will be increased if the Ayr people take this quantity from the Kilmarnock scheme, the cost will be very much less, and, on the whole, it means that you are saving several thousand pounds, and' that it would be a gain to the people of Ayr, instead of their having to spend
this money on a scheme which may not turn out to be successful.
Everyone knows that on the question of electricity the bigger the output the better, and the less the cost. When the Electricity Bill was before the House the whole cry from these benches was, "In the interests of economy let us have concentration." Here you have in Kilmarnock a huge installation, which can be at once utilised not only for supplying Ayr Burghs, but a district of 350 square miles. In that case it will be a great mistake for the Ayr people to spend a very large amount of money on a scheme which may not be a success. In the interests of economy it is very necessary that time should be given to think the matter over, so that if a scheme is at last required for Ayrshire it will be a great scheme run as one by the Kilmarnock people, the Ayr Burghs people, and the County Council, and if that scheme is required then it would be very much cheaper for the ratepayers as a whole if it is undertaken by this joint board. On these grounds we should get time to consider the whole question, and I trust, therefore, that the House will reject this Bill.

The CHAIRMAN of WAYS and MEANS (Mr. James Hope): I have listened with great care to the arguments used by the two hon. Members who have just spoken and, having heard them, I think it necessary to offer one or two words of advice to the House. This House has set up a very elaborate system to deal with Private Bills and the various local and technical considerations connected with them. Of course, the House always reserves its right to reject or amend these Bills when any large question of principle arises, but I cannot see there is any such principle in the case of the present Bill. Every one of the arguments that have been adduced, whether they be right or wrong, is exactly the kind of question for which the mechanism set up by this House is thoroughly well adapted, and for which debate in this House is not properly adapted. I pronounce no word of judgment on the merits of this Bill, but I am certain it is impossible to judge of the merits of the arguments which the hon. Members have advanced in opposition to the Bill. They are essentially the kind of arguments that must be judged by the Committee, and
I feel an indisposition—on no ground of principle, but merely on the merits of the scheme—to try to get the judgment of this House on matters as to which the House as a whole will never be properly informed, rather than to trust to the well-tried procedure which the experience of generations has established as proper to these cases. Therefore I say, in the interests of the conditions of Private Bill legislation, that this is emphatically the kind of Measure that ought to go to a Committee, and I would suggest that, without further arguments on the merits, a decision of the House should be taken as to whether the Bill should or should not go to a Committee.

Sir G. YOUNGER: My right hon. Friend has anticipated exactly what I proposed to say. I have in my hand an enormous mass of information which contradicts absolutely three-fourths of the statements made by the hon. Member for Kilmarnock Burghs (Mr. Shaw). A conflict of statements of that kind can never be settled on the Floor of this House. They are subjects which require an intimate and close inquiry by a Committee. This Bill has been passed by the other place under the presidency of the Marquis of Bristol, an old Member of this House with a Parliamentary experience of 20 years. Everybody knows the high reputation which Committees of the House of Lords hold both in the opinion of this House and of the country. They are more permanent in their composition than our Committees ever can be, as those Noble Lords do not change as we do from time to time, and they have procedure and precedents which guide them in such matters which are of the very highest value. With regard to the statements made by my hon. Friend, one would think that Ayr had no system at all, and that the whole possible future of electrical supply depended on Kilmarnock. This is really a case of jealousy between two neighbouring towns. Ayr is jealous of Kilmarnock, and Kilmarnock is jealous of Ayr, just as Edinburgh is jealous of Glasgow and Greenock is jealous of Paisley. We have got these cases all over Scotland. It is enough for one corporation to propose one thing, for another corporation to oppose it out of pure devilment.
In this particular case, while I have the honour to represent the town of Ayr, I also represent Troon and Irvine, and
these are getting their supply of electricity from Kilmarnock. So I take an unbiased view of the situation. But I have received only one protest from Ayr against this Bill. That, I believe, was composed before the House of Lords' Committee. I have received no protest of any kind from Troon or Irvine against this Bill, although they obtain their supply from Kilmarnock. My hon. Friend the Member for Kilmarnock, in his very able speech—he always makes very able and persuasive speeches; he knows the trick, and I always listen with the greatest pleasure to him—compelled me to admire the boldness of his statements and his antithetical peroration; but at the same time I contradict flatly some of the statements he made and can give my reasons for doing so. However, in view of what the Chairman of Ways and Means has said, I ought to refrain from detaining the House when it will be kept till the very early morning in discussing the Finance Bill, and I feel that I ought merely to say now that I do not and cannot accept the statements made by the hon. Member for Kilmarnock. Those statements are all capable of contradiction. The statement as to the station in Kilmarnock, which he described as being sufficient to supply Ayr, is directly contradicted by the evidence of the Kilmarnock engineer. [HON. MEMBERS: "Oh!"] If hon. Members say "Oh" I will read the contradiction to them. It is question 1762—
Q. Do you mean that if they are to supply us and their own areas they will have to increase the station hereafter?—A. Yes, and they will have to increase it if they are to supply Ayr.
In another part of the cross-examination it comes out that if they have not at this moment more than enough water for condensing purposes, they have, at any rate, no supply for the largely increased power which would be required if the Ayr demands had to be supplied. I am bound to consider the advice given by the Chairman of Ways and Means and to refrain from doing more than saying that in a matter of this kind, when a Bill has been thrashed out before a Committee of the House of Lords, and when the county council opposition has been composed by an agreement which I have here, it is unfair that this House should reject the Second Reading of a Measure so very technical in its character.

9.0 P.M.

Mr. J. WALLACE: There is no one here who does not attach very considerable weight to the intervention in this Debate of the Chairman of Ways and Means. I find myself in something of a difficulty after the statement of the last speaker. I have no wish to continue the Debate unnecessarily, but, having promised my hon. Friend the Member for Kilmarnock (Mr. A. Shaw), after full consideration of this subject, to support him in his objection to the Bill, there is no alternative but to deal with the matter in the ordinary way. I hope that the Chairman of Ways and Means will not interpret my action as disrespectful to his intervention, for, since the inquiry took place in the House of Lords, the position has very sensibly changed. The hon. Member for Ayr Burghs (Sir G. Younger) has told us that the county council withdrew opposition to the Bill. Why did they do so? Because the application of the Bill to the county council was withdrawn, and the county council have since carried out a provisional agreement with the Kilmarnock Corporation for the supply of electricity. I suggest that that changes the whole position, and, having read carefully the statement made, first of all, by the Ayr Corporation, and, secondly, by the Kilmarnock municipal authority, I am forced to the conclusion that the hon. Member for Kilmarnock is absolutely justified in the clear and convincing statement that he gave to the House. I do not pretend to any expert knowledge, but it is surely elementary to say that in all these commercial matters the highest efficiency and the lowest cost can be achieved only by production on a very considerable scale. We have had it clearly explained to us that at Kilmarnock you have a thoroughly up-to-date and well-equipped plant, capable of almost any expansion, and I utterly fail to understand how this fantastic scheme at Looh Doon can be entertained by the Ayr Corporation. It can be explained only on the ground mentioned by the hon. Member for Ayr Burghs. He has told us that it is done merely for devilment. That is not a reason which should appeal to the intelligence of this House, and if it be the only ground upon which Ayr Burghs are proceeding with the Bill in declining to take their supplies from Kilmarnock, I have no doubt about the result of the Division to-night.
The hon. Member for Kilmarnock mentioned something about a lunch, the precise significance of which I failed to understand, but in future, when the distinguished municipal authorities from Kilmarnock and Ayr meet to discuss business, I would respectfully suggest that they do so over a cup of tea—that cup which cheers but which does not inebriate. I am convinced from my hon. Friend's statement that there has been only one case put before the House, and if I required any further argument in support of that view I have it in the statement issued by the Ayr Burgh municipal authority. A less convincing, statement I have seldom read. I shall refer to only one point in it. They make various statements as to what has been said before the Electricity Commissioners, but all they can say in recommendation of the Loch Doon scheme, which is to cost £250,000, is that is "a possible source of supply." If £250,000 is to be spent to-day on "a possible source of supply," when, indeed, the supply is bound to be intermittent, the west country people have lost some of that sagacity and desire for economy with which their name is always associated. I almost apologise for intervening in a west country quarrel, but I hone that in this case a dispassionate voice from the east may not be without a little effect in inducing Members to reject what I believe to he a Bill for incurring totally unnecessary expenditure.

Mr. STURROCK: I hope the House will reject the Bill. We have been told we may be kept up until all hours of the morning on the Finance Bill and, accordingly, I shall not develop all the arguments that might be brought against it. If one had time to do so, it would be very simple to show that the proposal of the Bill is one of the most fundamentally drastic that was ever submitted to the consideration of the House of Commons. Here we have the community of Ayr with an ample supply of electricity at only a very few miles distant, which can be developed to almost any extent imaginable, having in view all the requirements of the burgh. Bearing that in mind, it seems astounding that in a time when we are told all economy must be practised, not merely as regards the taxpayer but as regard the ratepayer—
that at a time like this, when economy is the watchword and to some extent the catchword of everyone, a proposal should be brought to the consideration of the House which involves an enormous capital expenditure and which is obviously not justified on the facts which have been placed before the House. There was a discussion in the House a few weeks ago about the Grampian electric scheme. Here we have a suggestion that a comparatively small station should be put up at a very high cost to supply a limited area containing something like 45,000 inhabitants. I yield to no one in my admiration for the hon. Member for Ayr Burghs (Sir G. Younger), but I do not feel convinced by his statement nor, with all due respect, do I feel convinced by the statement of the Chairman of Ways and Means.
He said this Bill had gone through the usual Private Bill procedure. Of course it has done so. I have had the honour of taking part in the transaction of private Bill business and I fail to see why it should affect this House in any degree. This House is the ultimate authority which must declare its purpose upon all these proposals, and the mere fact that this Bill has received the assent of a Committee is no conclusive reason why it should receive our approval without discussion or objection. When my right hon. Friend the Member for Ayr Burghs said this represented jealousy between two towns I felt all the more that it was high time for those who had economy at heart to oppose any proposal of the sort which was going to laud the ratepayers of any community in an almost unlimited obligation of expenditure upon which they had never been consulted. I feel strongly that this House, whether from the point of view of the taxpayer or the ratepayer, must look after every suggestion of expenditure in the closest possible fashion. It is conclusively clear to anyone who knows the local circumstances of the case that there is no reason for the setting up of a new station at Ayr to take any part of the business from Kilmarnock, and for these reasons I feel no doubt whatever in supporting my hon. Friend who has moved the rejection of the Bill.

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Sir John Baird): I ask the House to give me its attention for one or two moments on
purely personal grounds and speaking in a purely personal capacity. I am not speaking in this matter as Under-Secretary for the Home Department, but I happen to know the district and have been acquainted with it for some time. It does seem rather curious that Ayr should have its affairs arranged by Dunfermline, Montrose and Kilmarnock. When the British House of Commons considers a Measure of this kind are we not to take into account whether the Measure is for the benefit of the particular district concerned? It so happens that this Bill is backed and promoted by the Provost and council of the town itself, and also by the hon. Member for the Burgh. Primâ facie I do suggest that this to the mind of the ordinary average man outweighs the reasons which hon. Members have endeavoured to put before the House in opposition to the Bill. Here is a question deeply concerning the town of Ayr. The town of Ayr, through its Provost and council, have made up their minds to develop a water supply with which I personally am well acquainted, and which, according to expert advice, is capable of producing the electricity they desire. Kilmarnock says "No, you shall not develop that water supply. We shall force you to take electricity from us." The hon. Member for Kilmarnock (Mr. A. Shaw) says they are going to be represented on the Board. What representation are they going to have on the Board. Are they going to be a majority of the Board. They will be represented, I suppose, in accordance with the amount of electricity which they will use, and that will be an infinitesimal proportion of the amount generated at Kilmarnock. I have followed far enough the path of my hon. Friends who have preceded me and I do not wish to proceed upon it further. I merely wish to support what has been said by the Chairman of Ways and Means. We have provided machinery for dealing with these questions. That machinery has been used to the extent that a Committee of the other place has sat, not for a few moments but for seven days, and considered this question, and after having heard the evidence has come to the conclusion that the Measure is desirable. I suggest we should put this Bill through the rest of the machinery which is provided for the purpose, and that we really should not, after a perfunctory discussion,
deprive Ayr of the advantage which it is felt will be derived by putting this scheme into operation.

Mr. MACQUISTEN: I think the right hon. Member for Ayr Burghs (Sir G. Younger), for whom I have great respect, has supplied unconsciously the best possible reason for rejecting the Bill. He referred to local jealousy as between different towns, and he spoke about jealousy as between Glasgow and Edinburgh.

Sir G. YOUNGER: The jealousy is on the part of those opposing the Bill, not on the part of those who are promoting it.

Mr. MACQUISTEN: The jealousies are mutual. I say this town has no business, even though they have a Provost and town council, to come up here to this House and spend the ratepayers' money on futile litigation. I hope, for the sake of the future prospective candidate for the Ayr Burghs, that the Bill does not become law before the next Election, with the accompanying expenditure of a quarter of a million. I think by that time, if it has come into force, and the Ayr ratepayers are looking at their electric lights, they will be inclined to sing a modified version of the immortal song of the bard who himself resided near Ayr. They will sing in regard to Loch Doon what was written about the river of Doon—
Ye banks and braes o' bonny Doon,
How can ye bloom sae fresh and fair,
How can ye shine ye little bulbs,
And we sae weary, fu' o' care!
On general principles, no one will charge me with being a man who is in favour of great combinations in municipal enterprise, but if you are going to have individualistic enterprise, you must have these large combinations for the generating of electricity. Nothing could be worse than particularism in these matters, and nothing would choke up the development of this country more than having a number of small electrical enterprises dotted up and down the country. One of my great ambitions is to see a well-developed scheme of electricity supply in this country, and if you are going to have cheap electricity, to my mind, the proper carriers and the proper generators of it are the railway companies. They would make the power for their own railways, and they would supply it to the districts through which
they run as a side line, and their overhead charges are already provided for. You will never get cheap electricity till you get some such scheme as that in operation. In the proposal that is now being considered, you will have double overhead charges, you will have separate engineers and separate managers, and you will have this little, circumscribed scheme for what is, I admit, this immortal town of Ayr. An hon. Member says it would be cheaper, but if a small electricity scheme is cheaper than a large one, it is for the first time in the history of electrical enterprise. Have we any certainty that there will be water in this Loch Doon scheme? It is very doubtful. At all events, what we know—and we have got. it confessed by the hon. Member for Ayr Burghs (Sir G. Younger)—is, that this is a little, mutual, municipal jealousy.

Sir G. YOUNGER: No.

Mr. MACQUISTEN: But I heard the hon. Member say it. All that we heard was that. Ayr could not condescend to take its electricity from Kilmarnock. In my view, they ought to go to the large county scheme there, and there ought to be one central supply for all these areas. This Bill is cutting into that principle of combination which has built up all our large enterprises, and, therefore, I think we should have no hesitation in rejecting it, and in days to come, when the temper of the two communities has died down a bit, I feel sure they will thank this impartial House of Commons that it had the good sense to save them from wasting their money.

Mr. JOHNSTONE: When my attention was first called to this scheme, and to the opposition to it of the hon. Member for Kilmarnock (Mr. A. Shaw), I was rather sympathetic towards his attitude. I know both Ayr and Kilmarnock well. I live on the border of the County of Ayr, and I know that the Kilmarnock people are a very enterprising people, and all the accounts that I have heard of its electricity supply scheme are in its favour, but I must confess that I do not think this House would be justified in rejecting this Bill. There have been many points brought before us to-night that can only be sufficiently explored by a Committee upstairs, and I think this House would
be on safer lines if, instead of interposing any obstacle in the way of this Bill, they should follow the usual procedure of allowing the Bill to go before a Committee upstairs, and allowing all those engineering details to be threshed out thoroughly. I must confess that what has been said about a joint scheme for the whole County of Ayr makes an appeal to one, but I take it that that would be taken into consideration by the Committee when they have considered the evidence on behalf of the Burgh of Ayr, and Ayr will have to establish and justify its case before the Committee. I do not think we would be doing our duty, either to ourselves or to the scheme contained in the Bill, if we ventured to interpose any barrier in the way of this Bill being thoroughly threshed out by a proper Committee, and so, not having any interest either in Ayr or in Kilmarnock, but largely influenced by what the Chairman of Ways and Means has said to us to-night, I think we would be doing a grave injustice if we prevented the Bill from going to a Committee. I therefore oppose the Amendment for the rejection of the Bill.

Mr. G. BALFOUR: On the merits of the scheme submitted by the promoters, and from the information which I have been able to gather from the two parties concerned in this matter, I am opposed to the scheme. Supposing for a moment that I was indeed the principal opponent of the scheme, whereas in fact I have no interest in it, I should, nevertheless, say that it was utterly wrong for this House to-night to refuse to allow this matter to go to a Committee and thereby upset one of our most valuable institutions in Private Bill procedure, as in this House it is quite impossible to give proper and adequate consideration to a Measure such as this, particularly as it has already occupied seven days in a Lords' Committee. I therefore think it is only right, even in the interests of the opponents, that the Bill should go before a Committee, where they can have their objections properly considered.

Mr. TREVELYAN THOMSON: May I suggest that, having passed an Electricity Bill two or three years ago setting up Electricity Commissioners, we are surely entitled to some guidance from them before coming to a decision on this point? The idea of that Bill, I understand, was
to appoint Commissioners who should have charge of these very problems which are before the House at the present time. They were responsible for that coordination which various hon. Members have referred to as being desirable, and I think it is only right that the House should have some guidance on the broad, general principle from the Minister in charge.

The PARLIAMENTARY SECRETARY to the MINISTRY of TRANSPORT (Mr. Neal): I wish to join in the request made by the Chairman of Ways and Means that this Bill should have a Second Reading. It is quite true that, under the Electricity Act, 1919, an area has been provisionally delimited by the Commissioners much larger than the County of Ayr. In fact, it includes the City of Glasgow—a very large area—but the Commissioners have advised the Minister, and the Minister, in his Report to the other House, has said that he has no objection to the scheme on its merits. I do not wish to suggest that there are not necessary Amendments that could be made in Committee of this House, if the House he pleased to give the Bill a Second Reading. On the question as to the utilisation of the waters of Loch Doon for the purpose of this electricity supply, I would remind the House that

the Water Power Resources Committee, which was presided over by Sir John Snell, who happens also to be the chief Electricity Commissioner, did themselves recommend that as one of the waterpower schemes that might usefully be entertained. Without wishing to say more, because the matter will require detailed consideration at the hands of a Committee of the House, I respectfully suggest that this is a case in which the House is quite incapable, in the course of a discussion of this description, of fully considering its pros and cons. In answer to the hon. Member for Middlesbrough (Mr. T. Thomson), I may say that the Electricity Commissioners see no insuperable difficulties in the scheme. It will in no way prevent the development of the area which they have deliminated, and I propose to go into the Division Lobby in support of the Bill.

Several hon. Members having risen—

Mr. JAMES HOPE: rose in his place, and claimed to move, "That the Question be now put."

Question put accordingly, "That the word 'now' stand part of the Question."

The House divided: Ayes, 129; Noes, 75.

Division No. 185.]
AYES.
[9.25 p.m.


Agg-Gardner, Sir James Tynte
Edwards, Major J. (Aberavon)
Lewis, Rt. Hon. J. H. (Univ., Wales)


Armitage, Robert
Edwards, Hugh (Glam., Neath)
Lloyd, George Butler


Baird, Sir John Lawrence
Elliott, Lt.-Col. Sir G. (Islington, W.)
McCurdy, Rt. Hon. Charles A.


Balfour, George (Hampstead)
Elveden, Viscount
Macdonald, Rt. Hon. John Murray


Banton, George
Falle, Major Sir Bertram Godfray
Mackinder, Sir H. J. (Camlachie)


Barker, G. (Monmouth, Abertillery)
Fell, Sir Arthur
Magnus, Sir Philip


Barlow, Sir Montague
Foot, Isaac
Manville, Edward


Barnes. Major H. (Newcastle, E.)
Fraser, Major Sir Keith
Mason, Robert


Barnston, Major Harry
Galbraith, Samuel
Mildmay, Colonel Rt. Hon. F. B.


Barrand, A. R.
Gibbs, Colonel George Abraham
Morden, Col. W. Grant


Barrie, Sir Charles Cougar (Banff)
Gilmour, Lieut.-Colonel Sir John
Moreing, Captain Algernon H.


Bartley-Denniss, Sir Edmund Robert
Gray, Major Ernest (Accrington)
Morrison-Bell, Major A. C.


Bell, Lieut.-Col. W. C. H. (Devizes)
Green, Joseph F. (Leicester, W.)
Murray, John (Leeds, West)


Benn, Captain Wedgwood (Leith)
Greenwood, Rt. Hon. Sir Hamar
Myers, Thomas


Betterton, Henry B.
Greenwood, William (Stockport)
Neal, Arthur


Birchall, J. Dearman
Greig, Colonel Sir James William
Newman, Sir R. H. S. D. L. (Exeter)


Bird, Sir R. B. (Wolverhampton, W.)
Gritten, W. G. Howard
Norris, Colonel Sir Henry G.


Bird, Sir William B. M. (Chichester)
Hannon, Patrick Joseph Henry
Pease, Rt. Hon. Herbert Pike


Bowyer, Captain G. W. E.
Heyday, Arthur
Pennefather, De Fonblangue


Bramsdon, Sir Thomas
Holbrook, Sir Arthur Richard
Perkins, Walter Frank


Bruton, Sir James
Hope, Sir H. (Stirling & Cl'ckm'nn'n,W.)
Perring, William George


Cairns, John
Hope, Rt. Hon. J. F. (Sheffield, C.)
Pownall, Lieut.-Colonel Assheton


Campion, Lieut.-Colonel W. R.
Hope, Lt.-Col. Sir J. A. (Midlothian)
Preston, Sir W. R.


Carr, W. Theodore
Hopkins, John W. W.
Pretyman, Rt. Hon. Ernest G.


Cecil, Rt. Hon. Sir Evelyn (Aston)
Hurd, Percy A.
Renwick, Sir George


Chamberlain, N. (Birm., Ladywood)
Hurst, Lieut.-Colonel Gerald B.
Richardson, R. (Houghton-le-Spring)


Clough, Sir Robert
Irving, Dan
Roberts, Samuel (Hereford, Hereford)


Cory, Sir J. H. (Cardiff, South)
Jackson, Lieut.-Colonel Hon. F. S.
Roberts, Sir S. (Sheffield, Ecclesall)


Courthope, Lieut.-Col. George L.
Jephcott, A. R.
Robinson, S. (Brecon and Radnor)


Davidson, Major-General Sir. J. H.
John, William (Rhondda, West)
Rose, Frank H.


Davies, Thomas (Cirencester)
Jones, J. T. (Carmarthen, Llanelly)
Royce, William Stapleton


Dawson, Sir Philip
Jones, Morgan (Caerphilly)
Sanders, Colonel Sir Robert Arthur


Doyle, N. Grattan
Kenyon, Barnet
Scott, A. M. (Glasgow, Bridgeton)


Edwards, C. (Monmouth, Bedwellty)
Lawson, John James
Shaw, William T. (Forfar)


Simm, M. T.
Turton, Edmund Russborough
Wilson, Rt. Hon. J. W. (Stourbrdge)


Stanley, Major Hon. G. (Preston)
Walsh, Stephen (Lancaster, Ince)
Wilson, Rt. Hon. Col. L. O. (R'ding)


Stanton, Charles Butt
Ward-Jackson, Major C. L.
Wintringham, Margaret


Strauss, Edward Anthony
Ward, Col. J. (Stoke upon Trent)
Wolmer, Viscount


Sugden, W. H.
Ward, Col. L. (Kingston-upon-Hull)
Wood, Sir H. K. (Woolwich, West)


Taylor, J.
White, Charles F. (Derby, Western)
Wood, Major M. M. (Aberdeen, C.)


Thomson, F. C. (Aberdeen, South)
White, Col. G. D. (Southport)



Thomson, T. (Middlesbrough, West)
Wignall, James
TELLERS FOR THE AYES.—


Thorne, G. R. (Wolverhampton, E.)
Williams, C. (Tavistock)
Sir George Younger and Mr. Johnstone.


Townley, Maximilian G.
Wills, Lt.-Col. Sir Gilbert Alan H.



Tryon, Major George Clement




NOES.


Armstrong, Henry Bruce
Hacking, Captain Douglas H.
Remer, J. R.


Banbury, Rt. Hon. Sir Frederick G.
Hamilton, Sir George C.
Roberts, Rt. Hon. G. H. (Norwich)


Barker, Major Robert H.
Hayward, Evan
Roundell, Colonel R. F.


Barton, Sir William (Oldham)
Henderson, Lt.-Col. V. L. (Tradeston)
Seddon, J. A.


Bowerman, Rt. Hon. Charles W.
Hinds, John
Stephenson, Lieut.-Colonel H. K.


Breese, Major Charles E.
Hohler, Gerald Fitzroy
Sturrock, J. Leng


Briant, Frank
Hopkinson, A. (Lancaster, Moseley)
Surtees, Brigadier-General H. C.


Bromfield, William
Inskip, Thomas Walker H.
Swan, J. E.


Bull, Rt. Hon. Sir William James
James, Lieut.-Colonel Hon. Cuthbert
Sykes, Sir Charles (Huddersfield)


Carter, W. (Nottingham, Mansfield)
Johnson, Sir Stanley
Terrell, George (Wilts, Chippenham)


Cautley, Henry Strother
Jones, Sir Evan (Pembroke)
Thomas, Sir Robert J. (Wrexham)


Clay, Lieut.-Colonel H. H. Spender
Jones, G. W. H. (Stoke Newington)
Thorpe, Captain John Henry


Colvin, Brig.-General Richard Beale
Kidd, James
Wallace, J.


Coote, Colin Reith (Isle of Ely)
Lewis, T. A. (Glam., Pontypridd)
Walters, Rt. Hon. Sir John Tudor


Cope, Major William
Lindsay, William Arthur
Walton, J. (York, W. R., Don Valley)


Davies, A (Lancaster, Clitheroe)
Locker-Lampson, G. (Wood Green)
Warner, Sir T. Courtenay T.


Edgar, Clifford B.
Lort-Williams, J.
Watts-Morgan. Lieut.-Col. D


Edwards, Allen C. (East Ham, S.)
McNeill, Ronald (Kent, Canterbury)
Wheler, Col. Granville C. H.


Entwistle, Major C. F
Macquisten, F. A.
Wild, Sir Ernest Edward


Evans, Ernest
Mallalieu, Frederick William
Williams, Col. P. (Middlesbrough, E.)


Falcon, Captain Michael
Marks, Sir George Croydon
Wilson, Col. M. J. (Richmond)


Finney, Samuel
Nall, Major Joseph
Wise, Frederick


France, Gerald Ashburner
Newbould, Alfred Ernest
Yes, Sir Alfred William


Gould, James C.
Parry, Lieut.-Colonel Thomas Henry



Goulding, Rt. Hon. Sir Edward A.
Prescott, Major Sir W. H.
TELLERS FOR THE NOES.—


Greene, Lt.-Col. Sir W. (Hack'y, N.)
Rae, Sir Henry N.
Mr. A. Shaw and Mr. R. McLaren.


Bill read a Second time, and committed.

Orders of the Day — FINANCE BILL.

Again considered in Committee.

[Mr. JAMES HOPE in the Chair.]

NEW CLAUSE.—(Amendment of 10 and 11 Geo. V, c. 18, Sch. 2, par. 4.)

Paragraph 4 of the Second Schedule to the Finance Act, 1920, shall have effect with the substitution of the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a duty of five shillings is chargeable, used solely in connection with agriculture" for the words "Tractors, agricultural tractors, and agricultural engines, other than such tractors or engines in respect of which a duty of five shillings is chargeable, used for haulage, solely in Connection with agriculture."

Postponed Proceeding resumed on Question, "That the Clause he read a Second time."

Question again proposed. Debate resumed.

Mr. NEAL: When the proceedings of the Committee were interrupted by the Private Business, my hon. and gallant Friend the Member for Midlothian (Lieut.-Colonel Sir J. Hope) had pro-
posed this new Clause. He appealed for some further relaxation of taxation in regard to agricultural tractors. I regret that I cannot meet his views in this matter. The whole question of motor taxation it at present subject to the consideration of a, Committee. With reference to this particular new Clause, the question has arisen in this way: A concession was made to agriculture in respect of certain agricultural tractors, on the ground that they did not normally use the roads. They were used normally on the land and only occasionally for hauling goods on the roads. That class of vehicle, therefore, escaped with the very low tax of The vehicles of a similar class which are used for the carrying of goods, and which, therefore, normally do use the roads, and on that basis have to pay for the upkeep of the roads, were charged a higher duty. I regret that I cannot meet the views of my hon. Friend, and that I must ask the Committee not to accept this Clause.

Mr. ROYCE: I hope the Committee will accept the Clause, and for the reason that, so far as agriculturists are concerned, they pay exceedingly heavy rates for the upkeep of the roads, and they
are in quite a distinct and separate position from the rest of the community who use vehicles on the roads for purposes of hire. It seems to me that the Mover of this Clause has made out an excellent case. I would urge its acceptance for a further reason. I know I shall offend the susceptibilities of some of my friends opposite when I say that this is a slight weapon in the hands of the agricultural community to combat the present ruinously heavy railway rates charged on agricultural produce. It is for that reason principally, and, secondly, because agriculturists, especially farmers, pay very heavy rates in comparison with the amount of use which they make of the local rural roads, that I support the Clause.

Mr. TURTON: I hope that the Committee will support this Clause. As usual,

that poor Cinderella, agriculture, is to be left out in the cold. This is an extremely hard case. As my hon. Friend the Member for the Holland Division (Mr. Royce) has pointed out, the farmers pay almost the whole rates for the roads, except for the small subsidy from the Road Board. What we ask is, that if the tractor be used for purposes of conveying goods to market, the farmer should be allowed to get his tax at a lower rate. I do suggest, under the circumstances, having regard to the unsatisfactory reply received from the Government, that we should go to a Division.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 75; Noes, 136.

NEW CLAUSE.—(Repeal of Entertainments Duty in case of cinematograph theatres.)

(1) The present scale of Entertainments Duty as imposed by the Finance (New Duties) Act, 1921, as amended by any subsequent enactment, and so far as it applies to cinematograph theatres, shall be and is hereby repealed, and shall be substituted therefor an ad valorem rate of seven and a-half per cent, of the total sums received on account of admissions to such entertainments.
(2) A cinematograph theatre, for the purpose of this Section, shall be deemed to be any premises licensed under the provisions of the Cinematograph Act, 1897, and in which cinematograph films comprise not less than nine-tenths of the total time of each complete programme of entertainment.—(Mr. Newbould.)

Brought up, and read the First time.

Mr. NEWBOULD: I beg to move, "That the Clause be read a Second time."
I found myself in sympathy with the various Clauses which have been moved in regard to the Entertainments Duty as it affects charities, sports, art exhibitions, and so on, but these matters can be satisfactorily dealt with if those interested in them will have, what I have had on many occasions—an interview with the Customs authorities. They can then discuss how the tax is to be properly and fairly applied. They will find on the part of the Customs officers the utmost sympathy with all these cases, and I feel sure most of them will be met by administration without any alteration in the law. I am sorry that in discussing the effects of the tax in these different respects we have not discussed its effect on the cinematograph industry. The Clause I now move has the effect of changing the present scale, with all its inequalities, into a flat
rate. It is the same, in effect, as a Clause standing on the Paper in the name of the hon. Member for the Moseley Division of Birmingham (Mr. Hannon). Although the Clause I now move mentions 7½ per cent. as the flat rate in question, I would be quite prepared if it were in order to substitute for that a flat rate of 12½ per cent. which is mentioned in the Clause of my hon. Friend. It is not strictly in order however to talk of a flat rate of 12½ per cent., because it does in one section of the scale increase the charge.
When I put down this Clause certain sections of the industry were opposed to the flat rate. Now, all sections of the industry have come together, and all the indoor sections, at any rate, have conveyed to the Chancellor their acceptance of the flat rate of 12½ per cent. The best way I can commend this Clause to the Committee is by endeavouring to anticipate and deal with the arguments which will probably be put forward against it. In fact, I think the Chancellor would agree at once there is only one argument of any substance which can be put forward against it. That is the argument which I anticipate the Chancellor himself will advance; he will say to the Committee, "This will cost the revenue so much money that I cannot afford it." I say to the Chancellor, as I said before, that he cannot afford to refuse this concession. If he does, the revenue derived from the tax will dry up like a wayside pool in a hot summer. It is already drying up. Last year the revenue from the Entertainments Duty from all sources fell by about £1,500,000, and that, in spite of the fact that from many sources the revenue was increased. From football and other outdoor sports the Chancellor of the Exchequer had a record year, but from the indoor side of the entertainment industry his revenue fell by about £1,500,000. It is estimated that some £900,000 of this decrease was attributable to the falling off in the cinema theatres.
I would like to point out to the Committee that for every pound fall in the revenue derived from the duty, there is a fall of £4 in the takings of the theatres; that is to say, that the tax is roughly 25 per cent. of the gross takings in the case of the cinema theatres. Therefore, if the revenue from the cinema theatres fell, as I estimate it did last year by some £900,000, the takings of those theatres fell by four times that amount. All I can say
is this—and the position of the industry to-clay proves it conclusively—that the industry never made that much profit; the industry never in one year made the amount of profit which they lost in takings in that year. The revenue from the cinema industry fell by some £900,000, and the takings must have fallen by some £3,600,000. The revenue is now falling at a much more rapid rate, but supposing it only falls during the course of the current financial year from the cinema theatres by £1,000,000, that means that the takings of those theatres will have fallen by £4,000,000, and after the fall of the previous year of, roughly, £3,600,000, you will have a decrease in your gross takings by cinema theatres of £7,600,000.
There is only one possible end to that process, and the end is near; the end is in sight. This is the most flagrant case in modern times of over-taxation destroying an industry, and unless the Chancellor of the Exchequer can see his way to give a considerable and substantial concession to the industry, he will in a very short time have destroyed the source of his revenue. It is not a question as to whether the Chancellor of the Exchequer will get from this industry during this year £5,000,000, or £4,000,000, or £3,000,000, or £2,000,000; the question is, Will the industry survive? That is the question which the right hon. Gentleman has to decide to-night, and it is a responsibility which he must take on his own shoulders. This is a valuable industry; this industry is of very great value to the nation; it is a national asset. It is an industry in which at least £40,000,000 is invested. It employs some 120,000 people—musicians, attendants, and electricians. At the present moment these places are closing down at the rate of four a day. [HON. MEMBERS "Hear, hear!"] That is an attitude of mind which I am not surprised to find on that side of the Committee, but it is not shared by the Chancellor of the Exchequer or by the Members of the Government. Throughout the War and since the War, on every occasion of national emergency, the Government has come to the cinema industry for help and assistance. From the Prime Minister downwards, I can produce letters from every member of the Government thanking the industry for the valuable services it has rendered to the Government and the nation. Therefore, though some hon. Members
opposite may think that this industry is not a valuable one, I am glad that this obsolete view is not shared by the Government.
There is another argument that the Chancellor of the Exchequer will probably put forward why he cannot make any concession to this industry. He will say that it is only suffering from the industrial depression from which all other industries are suffering, and that when prosperity comes again that will be quite sufficient, and the cinema industry will probably revive very rapidly. That, unfortunately, is not entirely true. This is a new industry; it is suffering from growing pains, amongst other things; and while industrial depression is naturally affecting it seriously, it is not the whole cause of the difficulty. The fact is, there has been a somewhat lopsided development, due entirely to the War. The improvement and development in the production of films has far outpaced the improvement and development of the buildings in which they are shown. The reason for that is that the centre of film production is in America. During the War there was an enormous development in films in America, and there was also a corresponding improvement in the buildings in which the films were shown. Owing to the difficulty of building, the restrictions on building during the War, and the very high cost of building after the War, there has not been in this country the development in the buildings which is absolutely necessary to keep pace with the development in the films. Before the War, you could secure a film programme to present to your audience, for three or six days, at a cost of about £25, £30, or £40. Your people were quite content with a performance of from an hour to an hour and a half. Now, your films costs, instead of £30 or £40, £200, £300, and £400; and it is not an extravagant price, the value is there. While, before the War, films were produced for £2,000 or £3,000, they now cost £30,000, £40,000, and anything up to £100,000 to produce.
Where, at one time, the average length —almost the maximum length—of a film was from 2,000 to 3,000 feet, it is now some 5,000 feet. The theatres to-day, in the main, are too small to hold the money to pay the price for the films that they have to show. During the War we survived that difficulty, for the reason that
there were a large number of people, not only with the money in their pockets—that is the first essential—but there was another essential, they had time to spare. During the War and for two years after the War—during demobilisation—there were a great many idle people with money to spend. The result was that a number of these places started business at 11 o'clock in the morning, spreading their business over eight, nine, and 10 hours of the day, and during that period passed through their theatres a very large number of people. Now they have to concentrate the business into four to six hours, and the places are not big enough to hold sufficient people, in the hours at which they will attend, to pay for the cost of the films. That is one of the reasons why I say that it is not purely an improvement in the industrial conditions that is going to put this industry on its feet. The industry, in order to get on its feet, must attract capital, must show a sufficiently attractive return to be able to raise a considerable sum of money, in order to enlarge and improve its existing theatres, and, where that is impossible, to scrap the old ones, and build larger and better ones in their place. Until we arrive at that position, there is no real future for the industry. This tax, in its present form, being 25 per cent. of your box-office receipts, before you have paid rent, rates, taxes, wages, or anything else, makes it impossible to attract money, because financiers naturally say that to put money in an industry which has to pay away 25 per cent. of its earnings before it has paid any of its expenses is too highly speculative.
11.0 P.M.
There is yet another reason which the Chancellor of the Exchequer will no doubt give as to why he cannot give this industry any relief. He will say that it is not taxed in any different way from any other industry which deals in dutiable articles. I contend that that is not true. Those who sell tobacco or beer, which are dutiable articles, sell a separate article to each individual, and if they do not sell their complete stock this week, they carry it over to the next. We do not do that. We have to sell the same article to the public en masse. We present this article to the public, and it costs us just as much to sell the article to 100 people as it does to sell it to 10,000 people, and if we do
not sell it to enough people within the three days for which we hire it, to pay the cost of it, we have no stock to carry over to the next week. It is lost, and lost for ever. That is entirely the difference between the effect of this tax upon our industry, and the effect of a duty on articles like beer and tobacco. While X number of people will pay our costs, X + 1 means 100 per cent. profit on the one, X - 1 means loss. X + 1 means success; X - 1 means failure. For the Chancellor of the Exchequer to take 25 per cent. of the gross takings, whether they are X + 1 or X - 1, makes little difference to him but is of vital importance to the industry.
I want, as briefly as I can, to point out to the Chancellor what, in my opinion, will be the effect if this tax is retained in its present form, and what will be its effect if he accepts the new Clause. In the first case the Chancellor will seriously damage, if not irretrievably destroy, the industry which is of great value, or it will be given a blow that it will not recover from for many years, and it will throw out of employment many people now employed. It will cause tens of thousands of investors to lose the money they invested before the tax was imposed, and before such Measures as the Daylight Saving Bill came into operation. I believe in daylight saving; it is an excellent thing. I would not oppose it; but I would point out to the Chancellor that it means a vast sum of money to the industry for which I am speaking. It also means that the right hon. Gentleman loses a considerable amount of revenue arising out of dutiable articles, carbons, etc. If the Chancellor makes this concession of a 7½ per cent. flat rate he will first of all destroy the inequalities of the present system, which are obvious to every Member of the House. The duty varies from 16 to 40 per cent. on the lower priced to 11 to 16 per cent. on the higher priced seats. We ask for a flat rate, so that all sorts of indoor entertainments shall be on an equality in this matter. In acceding to this, the Chancellor will destroy the unfairness and injustice of the incidence of the tax. He will encourage the development and expansion of the industry, and employment will be found for a large number of men in the building trade and
the allied trades. The decorative, fibrous plaster, wood and stone carving, carpet and tapestry making, upholstery, electric equipment will get an immediate and much needed stimulus if this tax is remitted. I think the Chancellor of the Exchequer will find that it will have an immediate effect upon the volume of unemployment, because some thousands of men will instantly find employment, and the unemployment benefit will consequently be saved to the country. The right hon. Gentleman will also save the investments of the shareholders. Altogether, if he looks carefully at the two sides of the picture, he will have no hesitation in making the concession for which I am asking. The Chancellor of the Exchequer, disguised in a cloak and a mask and armed with a dagger, may slit the gizzard of the unfortunate taxpayer in a dark lane to-night, but to-morrow, when ho appears in a more sober and conventional garb, he will find himself the chief mourner at the funeral of a generous and longsuffering taxpayer. I would ask the Chancellor of the Exchequer to depict this dual role before the film camera, and if he would do this, even if he did not succeed in reviving the fortunes of the industry, he would put a substantial sum into his own private purse and enhance at the same time the amount of revenue he would derive from this duty.

Mr. J. C. DAVIDSON: I do not know whether I can still claim the indulgence accorded to a maiden speech, as I have already taken part on a former occasion in Debate in this House, but, nevertheless, I think I can rely upon the indulgence of the Committee. I sincerely trust that the Committee will reject this Clause. The measure of the weakness of the case of the hon. Member who moved this new Clause may be judged by the length of his speech. I shall be very brief. When any industry or any organisation comes to the Chancellor of the Exchequer and prays for relief, it should at least show that, so far as it is able, it runs its business upon an economic basis. It is because the cinema business does not that I hope the Committee will reject this Clause, because, in the first place, the Exchequer is very hard pressed for money, and secondly, because any relief given to the industry will not benefit the consumer but will only enable that industry to pay grotesque salaries to artistes in
a foreign country which will not be spent in our country. I dare say other hon. Members have, like myself, received a communication from the cinema industry —I do not know why they call it an industry—to the effect that hon. Members who do not support this Clause will he subjected to a form of campaign on the screen which can be described as little less than blackmail. I listened with great interest to the arguments of the hon. Member who moved this Clause. He told us that picture palaces had been put up at great cost—far greater cost than in normal times—yes! in competition with the building schemes of the Government for the provision of housing accommodation.

Mr. NEWBOULD: I made no such statement.

Mr. DAVIDSON: I withdraw, of course, but it certainly was the impression on my mind that the industry had since the end of the War felt severely the expense of building.

Mr. NEWBOULD: I said the cost of building was so great that they could not afford to build.

Mr. DAVIDSON: Well, I leave it to the judgment of the Committee. All I ask is that we, Members of the House of Commons, should not give way before an agitation which is based upon a misapprehension of, and a failure to understand, the character of the people. We all know that the Exchequer is hard up. I listened to the arguments used by the hon. Member and to his picturesque phrases about the pools that will dry up. Some of them might well dry up. Let the Government resist this Clause. I have no doubt that by efficient administration of their own so-called industry the cinema people can make economies which will in no way impair either their receipts or the revenue from this duty.

Mr. HANNON: I have no interest whatever in any cinema undertaking, although, unfortunately, I once, at the suggestion of a friend, invested a small sum of money in a cinema, and it disappeared. I represent, however, one of the most intelligent constituencies in this country, and in that constituency I discovered a great number of people who were interested in this industry, and I have been, as I am sure have most hon. Members, deeply impressed with the value of the picture-house as an educa-
tional institution. Whether hon. Members disagree with everything that is manifest in the modern picture-house or not, it has come to stay in this country as an institution, and the danger at the moment is that the excessive taxation imposed upon the cinema theatre, which is one of the main educational and recreational opportunities of the people in these days, is crushing it out of existence altogether. I took the opportunity, when I became interested in this question, to make inquiries as to the extent to which these picture-houses were menaced by the existence of the tax, and I found a very extraordinary state of things, which I commend to the consideration of the Chancellor of the Exchequer.
One almost feels ashamed to make further appeals to the right hon. Gentleman. Having asked him for all sorts and conditions of things, one is very reluctant to continue to press further upon his good nature. What one finds, however, is that these picture theatres are steadily being closed down, and the ethical activities associated with them are gradually disappearing, while it is a fact that a very large number of people who were employed in connection with these enterprises are being put out of employment. I have had some examples given to me from the actual balance sheets of these theatres, showing the losses that are being made, and indicating the difficulties under which they operate. One concern, for example, paid £36,300 in tax last year, and made a profit of £100. I recommend my hon. Friend opposite, who severely criticised the anxiety of the people interested in this industry to try to protect themselves, to try to understand the attitude of mind of anyone who is in that position. Again, two theatres paid £12,000 and £10,000 in tax, and lost respectively £7,000 and £5,800. There has been a steadily growing stream of unemployment as a result of the disappearance of these theatres, and I am assured on excellent authority that, unless a substantial concession is made by the Chancellor of the Exchequer, a further number of these houses will disappear. Hon. and right hon. Gentlemen may think that is a good thing, but, properly managed, there is no institution in this country that can do more to stabilise national life, and give people opportunities of seeing something of the greater world
outside their own small sphere, of acquiring wider knowledge, and getting in touch with human progress abroad, than the picture theatre, and I am persuaded that it would be a misfortune, in many of the localities where these houses exist, that they should, under the pressure of this tax, be obliged to close their doors. I have had made for me, by the representatives of this industry in six areas in England, a series of investigations showing the losses which are being sustained in connection with these theatres under the pressure of the tax. It is very difficult for the Chancellor of the Exchequer to justify charging the working man 41 per cent. of his entrance fee into one of these picture houses as against the 11 per cent. which is charged to the rich man who can afford to go to a theatre. This afternoon the Solicitor-General, who has shown extraordinary ability in assisting the right hon. Gentleman in dealing with the Finance Bill, said all taxation ought to be fairly distributed having regard to taxable capacity, or words to that effect. Will anyone justify the incidence of a tax which inflicts 41 per cent. upon a person less able to bear it and 11 per cent. on a person who is much more competent?

Lord EUSTACE PERCY: The hen. Member and the mover of the Clause have spoken of the ad valorem duty on the higher priced seats in theatres as compared with cinemas. How does that ad valorem duty on cinemas compare with the ad valorem duty on pit seats in the theatre?

Mr. HANNON: Of course, my Noble Friend does not go to cinemas.

Lord E. PERCY: I go frequently.

Mr. HANNON: At any rate, I do not think there is much point in the question he has put to me.

Lord E. PERCY: I only ask for information.

Mr. HANNON: I ask the right hon. Gentleman to assist this industry and deal out to it a measure of fair play, and give it an opportunity of continuing its useful work without being overburdened by this abnormal taxation. I associate myself with the proposer of the Amendment in suggesting to the Chancellor of the Exchequer that if he gives the industry a
flat rate of 12½ per cent. all parties will be perfectly satisfied. There may be an immediate loss of between three to four millions of revenue, but he will give further opportunities of expanding these enterprises, and their taxable capacity will be increased. I hope he will consider this very carefully. I have no personal interest in the matter, but I think a great public institution of this nature, which all over the country has been utilised during and since the war for propaganda for educational purposes, should not be placed in the position it occupies now because of this abnormal burden of taxation.

Sir R. HORNE: I am sure the Committee will congratulate the intelligent theatre owners of Birmingham in having secured the advocacy of the hon. Member for the purpose of saving the cinema industry the burden of the Entertainments Duty, but. I think he put one part of his argument in a form which is not quite accurate and not quite fair. He talked of the large amounts paid to the Exchequer by certain theatres, when, in point of fact, they were only making a very small margin of profit, or actually incurring heavy losses. That does not quite represent the facts. It is putting the situation as though the tax were one like the Income Tax, which is a tax upon income, or other taxes which are taxes upon profits. The Entertainments Duty is not a tax of that kind. It is a duty like the beer duty. It is paid by the consumer—if I may so speak of the person who attends the entertainment —so long as the article can be sold at a price which enables the seller of the article to make his ordinary profit and also sell at a price which enables the consumer to pay the full amount of the tax. But when the consumer is in a position in which, through falling wages or decreased salaries, he is no longer willing to spend so much upon the article, then, obviously, the supplier of the entertainment must supply more cheaply, and he may find himself compelled to forego his margin of profit, and even sometimes to endure loss in order to keep in existence the industry to which he belongs. That is precisely the situation which was revealed last night in some of the speeches relating to the Beer Duty, where it was represented that many people to-day were making losses, although they have to pay
a very high duty upon the commodity they sell; that is a proper analogy. This duty ought not to he described as a tax upon profits when, indeed, no profits are being enjoyed.
Let me turn to the proposal which the hon. Member for West Leyton (Mr. Newbould) has made in this Clause, the Clause suggests a fiat rate duty of 12½ per cent. upon the proceeds of each particular theatre, when, in point of fact, the Amendment to which he spoke was one for a flat rate duty of 12½ per cent. He could not put that upon the Paper because it is out of order. While I was perfectly willing to answer an argument that upon 12½ per cent. the Committee must address its mind to the proposal for altering the duty to one of a. flat rate of 7½ per cent.

Mr. NEWBOULD: Why? The whole of my argument was upon the 12½ per cent. The right hon. Gentleman knows quite well that the 12½ per cent. is out of order on the Paper, but by permission of the Chairman I was allowed to talk on the 12½ per cent.

Sir R. HORNE: The Chairman was tolerant enough to allow my hon. Friend to proceed in that way, but the Committee can only vote for the Clause on the Paper. To alter the Entertainments Duty to a flat rate of 7½ per cent. would be to deprive the Exchequer of, even upon an estimated increased attendance, £5,900,000. If the duty were one of a flat rate imposed at 12½ per cent. the loss to the Exchequer would be £3,700,000. I have no objection at all, in principle, to a flat rate, and if that would relieve the people who supply entertainments of part of their present difficulty I should be very ready to agree to a reasonable flat rate. I put it to those whom I said, that if they could get me by a flat rate as much money as I get now, I should be willing to alter the arrangement by which the duty was imposed. The difficulty is that there are divergencies of interest in the entertainment trade. Theatres, on the one hand, take an entirely different point of view from the cinema owners.

Mr. NEWBOULD: Because they are taxed lower.

Sir R. HORNE: The hon. Member said that an agreement had been come to, and the agreement, if ever it was made, certainly did not embrace the whole of the theatres, or even most of the im-
portant theatres of this country. Immediately after it was announced upon the instigation of my hon. Friend the Member for Moseley (Mr. Hannon) that some such understanding had been arrived at, I received from the Theatrical Managers' Association a communication in which they said that they strenuously objected to a flat rate and desired that the scale should continue. They say:
My association, while objecting to entertainment duty in any form and while in discussions on the subject maintaining the view that the amount of the admission should be kept separate from the tax, by resolution at the general meeting on Thursday last reaffirmed their objection to a flat rate being substituted for the scale, and I am desired to inform you of this decision.
It is plain that the theatres and the cinemas do not see eye to eye on this subject. If I impose a flat rate I shall please the cinema people and I shall disappoint the theatre owners.

Mr. NEWBOULD: You will do justice.

Sir R. HORNE: I am afraid this is not a case in which you can talk about what is just. You can only talk about what is expedient, what is least damaging or burdensome to the industries involved. As I have said, having a flat rate of 12½ per cent. would deprive the Exchequer of £3,700,000 revenue. We cannot afford to forego that amount. But my hon. Friend drew a very sad picture of the decline of this industry, and he assured me that in appropriate mourning garb I should be attending its funeral within a short period.
I would ask the Committee to consider for a moment what is the precise position of this industry. I do not think that it is nearly so bad as my hon. Friend has suggested. What was the expectancy of an industry of this kind? This was a new industry. It has had an amazing mushroom growth. One would expect that an industry which had got a rapid stride at a time when the mass of the people of the country had more money to spend than now would have had a profitable time which would he mitigated to a certain extent when a more normal period arrived. That is exactly what you have. In the period during which this industry has been in existence 3,500 cinemas have been set up in this country. You could not expect that all these would survive in the ordinary course, even in normal
times. But I would ask the Committee to remember that not only was this a mushroom growth of a new form of entertainment in this country which must necessarily become depressed to a certain extent as time went on and as the poorer establishments got weeded out, but recollect that they were also 3,500 new centres of entertainment added to all the centres of entertainment which already existed in the country and which had previously supplied the people of the country with all the forms of entertainment which they seemed to require. [HON. MEMBERS: "No!"] After all, supply is generally equal to demand, though sometimes a new supply in itself creates a demand. At any rate, when you recollect that the people of the country only have a certain amount of money to spend upon entertainments, it stands to reason that if you enormously increase the supply of possible entertainments, either the people must have far more money to spend or else all these places of entertainment cannot survive. Accordingly, we should have expected, even though we were in normal times now, that some of these theatres would disappear. In fact, we are in the most depressed times we have ever known. Is it surprising that you should find this particular industry in a state of some embarrassment and difficulty? Is there any industry which is not in a state of embarrassment at the present time? Is there any industry which is not feeling the heavy burden of taxation? Let me make a short reference to a speech by a very distinguished gentleman well known in this House, Lord Ashfield. Chairman of the Provincial Cinematograph Theatres, Ltd. Speaking on 25th April of this year, at the annual meeting of this company, he stated that, whereas in the previous year their profits amounted to £224,000, they had dropped in the current year to £100,000, and he went on to say:
When I recollect that many of your theatres are situated in industrial centres. and that the number of unemployed has reached 2,000,000, or 16 per cent. of the workmen of the country, and when I recollect the number who are employed only part-time, I am startled at the moderateness of the decline.

Mr. NEWBOULD: Will the right hon. Gentleman go on to read the quotation from the same speech about the Entertainments Duty?

Sir R. HORNE: Certainly; I have no difficulty at all about that. Naturally he says that if you get the Entertainments Duty off under depressed conditions, there will be more money for the company. That is obvious. So, also, if you took off the Beer Duty there would be more money for the people who brew beer, and if you took off the Tea Duty more money for the people who import tea. But the fact is that he points out, with regard to this trade, that it has suffered seriously because of this depression through which we are passing, and because people who otherwise would he spending part of their wages upon entertainment are in fact unemployed and have not the money to spend. That is not all. Just as my hon. Friend pointed out that many other considerations have gone to the depression of this industry, namely, increased cost, unsuitable buildings and enormous priced for film hire, so Lord Ashfield points out that these are the large items which in fact have robbed the company of the profits which it would otherwise have. He says this:
There is the extravagantly enhanced cost of films. The increase under this head is £84,000.
In fact this Company, whose whole profit for the previous year had been £224,000, which had dropped to £100,000, had an increased cost between the two years of £84,000 for film hire.

Mr. KILEY: Out of that amount how much is Customs Duty?

Sir R. HORNE: Surely that is a bagatelle point. Let us keep to the point we are arguing. I do not think there was any change in the Customs Duty between the one year and the other. There are the facts. You had an industry which was of recent growth, finding itself suffer in a time of depression by greatly increased costs and new demands on its resources, and with enormously increased prices for films. What could you expect but depreciated profits, and, indeed, in some cases losses? I do not think the industry is so depressed as the hon. Member would like the Committee to believe. I will conclude by making reference to some indications, I will not say of prosperity, but at least of capacity to carry on, which I find by turning to "The Bioscope," the journal of this industry, for 1st June, 1922. The issue of that week contains
announcements of a number of openings of new cinemas and intimations of many similar projects nearing completion. A very optimistic article winds up thus—
With easier money and the continual drop in building materials it should not be long before we have at least 5,000 cinemas in operation.
That is not bad for an industry which is going to its grave and the funeral of which I am expected to attend.

Mr. NEWBOULD: Did I not understand the right hon. Gentleman a moment previously to say there were too many? He cannot have it both ways.

Sir R. HORNE: My hon. Friend will forgive me for saying that I catch him both ways. I do say that one would expect—especially in a time of depression and in the case of a crippled trade—the number to be on the decrease, but I say it is a very remarkable thing that one of the leading journals of this trade tells us, in point of fact, that they think things are doing well enough to lead them to expect that the number will not only be increased, but will be greatly enhanced.

Mr. KILEY: That is bluff for the shareholders.

Sir R. HORNE: If the shareholders have the admiration for my hon. Friend which I have, and if they read his speeches as carefully as I do, they would not be bluffed. On the contrary, the foolish would all be selling out and wise men would be picking up the shares. In the same number of this journal I find announcements relating to almost every leading town in England of new cinemas—magnificent palaces. In Leeds there is the "Wonder Cinema," costing some enormous sum of money—I think £200,000 is invested in it. There are other new cinemas in Manchester, Bolton and other centres. Even Birmingham, the home of decaying cinemas as we are told, is starting a new venture at a cost of £74,000. T believe with my hon. Friend the Member for West Leyton that the industry has been crippled to some extent, like every other industry, by the depression through which we are passing. I believe, like every other industry, there are places in which, by good management and enterprise, new ventures can still succeed. With every desire in the world to meet the embarrassments of this industry and to help it if we can, in the particular
circumstances in which we find ourselves there is no greater justification at the present time for giving special relaxation to this industry than there is in the case of any other industry.

Mr. SEDDON: I am sure the speech of the right hon. Gentleman has impressed every Member of the Committee with its adroitness and ability. If his statement were to be taken alone, without having regard to the close relationship of certain other facts which he has not stated, one might come to the conclusion that this was a very prosperous industry with rosy prospects. During the whole of this discussion the right hon. Gentleman has been overflowing with pity for every claim made to him. In fact one must say of his career as Chancellor of the Exchequer, that, so far, his way has been paved with good intentions. I wish to remind him there is a complement to that, which very often leads to a place where there is weeping and gnashing of teeth.
The right hon. Gentleman went on to point out that, according to one of the trade papers, a number of theatres were being built. He said that 3,500 had been built during the short career of this new industry. That is perfectly true, but this year, alone, 320 have been closed, and 1,200 are living upon credit. An hon. Gentleman waxed very eloquent and sarcastic in regard to this industry paying large salaries to the artists who produced the pictures, but he overlooked the fact that so far as the exhibitor is concerned his relationship is with the middleman, who is termed the renter. Twelve hundred of these cinemas are being kept open by middleman to-day, and unless some speedy relief is given to the industry they will go the way of the 320 to which I have referred and will have to be closed.
The right hon. Gentleman seemed to assume that the present depression was merely a phase that affected every other industry, and that the cinema industry had everything in common with them and nothing peculiar to itself. Before this industry came into being, other forms of entertainment met the requirements of the community. The cinema has appealed to a section of the community which had neither the opportunity nor the money to attend those forms of entertainments that existed before it came into being. A
large number of the people who go to the cinema are women and children. They have now been given the chance of getting away from their sordid surroundings and of obtaining some glimpse of life and travel in other lands. Yet of these cinemas, 320 have already been closed and 1,200 more are only hanging on by the grace of the renters.
The right hon. Gentleman referred to the Provincial Theatre Company. Be knows, as well as I do, that the Provincial Theatre Company are more than purveyors of pictures; they have hotels and tea rooms. It is a notorious fact that these agencies—in most cases, not in all of them—have been the one means of preventing a total loss throughout the industry. The rest of the theatres are either living upon these ancillaries to the industry or upon credit. It is beyond dispute that the industry is to-day in a most deplorable condition.
Apart from the position of the cinema people themselves, let us take a wider view. If the cinemas are closed, the women and children, who constitute the great mass of the people who attend them, will be denied this form of recreation. You will be helping to disturb, in a disturbed world, people who are looking for some relief, not only from their drab surroundings, but from the memories of the experiences through which they have passed during the last seven years. Apart from the economic side of the pictures there is the social side. If the right hon. Gentleman thinks that, in the financial stress of the Exchequer, he can, with impunity, close these places of amusement, then the spirit of unrest, which is all too prevalent to-day, will extend to the women, because you cannot expect these people to be contented with their surroundings as they exist to-day. I appeal to the right hon. Gentleman. He said he had sympathy with a flat rate. Will he consider, before the Report stage, the application of a flat rate? Some figure can be arrived at. The right hon. Gentleman gave an assurance to the deputation which saw him that he would be willing to meet them, if possible, on the question of a flat rate. I ask him not to thrust it on one side, but to give it further consideration, because I can assure him that this industry, as it exists to-day, is going towards a crippled condition which will bankrupt hundreds. If he can give some
little hopes of a flat rate, I believe he will not only lead those people from destruction, but give them some hope of being able to carry on until better times come. I ask him to invite the Trade to meet his representatives, and I am sure he would not be dissatisfied with the return coming from a flat rate.

Lieut.-Colonel NALL: So far in this Debate we have heard nothing at all of the point of view of the public. I am not concerned either with the cinema or with the theatre, and the merits of the one as against the other need not come into the discussion at all. I simply want to ask the Committee a very simple question, whether it is fair that those people who can only attend the kind of entertainment which is provided at a cheap price should have to pay as much as a 40 per cent. tax on admission, while other people —who can afford a different kind of entertainment—should only pay 11 per cent..? Where is the common fairness in a system which requires people in one district to pay on an average 25 per cent in tax—and some pay as much as 41 per cent—while not very far from this House we have an area where the average is 11 per cent.? It seems to me that there is a very important public question involved in this which has nothing whatever to do with the merits or otherwise of the cinema or theatre.
I am very sorry that the Chancellor of the Exchequer has taken up such an uncompromising position on this question, and has not addressed himself to what I venture to say is the general public aspect of the question. The fact that a flat rate, which has been suggested of 12½ per cent., would leave a deficit of £3,500,000, is not really an argument which ought to be used in support of the present system on which this tax is based. The fact that here is still another tax which is already overloaded, which is already charged on a basis which causes hardship to those who pay for it, is another of those questions which, I hope, will impress on the Government that the present rate of taxation in every direction, especially in the one now under consideration, is more than the public can stand, and the only alternative is to reduce expenditure.

Lord E. PERCY: I want to support the speech of the hon. and gallant Member who spoke last. This is, I think, a
question which has suffered considerably in the way it has been brought before this Committee. There is no real difference between the rate of taxation paid by the person who attends the cinema and the rate of taxation paid by the person who enters the pit seats of the theatre.

Lieut.-Colonel WATTS-MORGAN: But there is in the box seats.

Lord E. PERCY: Therefore, the question is not a question between one industry and another. We have heard "Industry, Industry, Industry!" the whole time. The question is one between the man who goes to a cheap entertainment and the man who goes to an expensive one.

Sir R. HORNE: That is not the Clause we are discussing. The Clause before the Committee is with regard to the substitution of a flat rate for the present system.

Lord E. PERCY: I quite quite realise that, but I do not think it is unfair to say that, in the minds of the large numbers of the public who go to the cinema rather than to the theatre, this Amendment is identified with that differentiation between the cheap form of entertainment and the expensive forte, and the flat rate proposal before the Committee is designed in essence to equalise the amounts paid.

Sir R. HORNE: Surely the Noble Lord must see, that if you put on a flat rate, each cinema proprietor will be at liberty to charge what he likes, and it will not ensure any equality amongst the various entertainments, or amongst districts, and still less in the same districts, and amongst the various cities.

Lord E. PERCY: I am sorry if I did not understand the point raised. But I do think there is a serious feeling throughout the country on the whole subject, and it does behold this Committee to consider very carefully whether the present taxation is just as between the amusements of the poor and the amusements of the rich.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 70; Noes, 158.

Division No. 186.]
AYES.
[9.40 p.m.


Banbury, Rt. Hon. Sir Frederick G.
Galbraith, Samuel
Rae, Sir Henry N.


Banton, George
Gould, James C.
Richardson, R. (Houghton-le-Spring)


Barker, G. (Monmouth, Abertillery)
Hayday, Arthur
Roberts, Samuel (Hereford, Hereford)


Barnes, Major H. (Newcastle, E.)
Hayward, Evan
Rose, Frank H.


Barrand, A. R.
Herbert, Col. Hon. A. (Yeovil)
Royce, William Stapleton


Barton, Sir William (Oldham)
Hohler, Gerald Fitzroy
Shaw, William T. (Forfar)


Bell, Lieut.-Col. W. C. H. (Devizes)
Holbrook, Sir Arthur Richard
Swan, J. E.


Bird, Sir William B. M. (Chichester)
Hope, Sir H.(Stirling & Cl'ckm'nn,W.)
Thomas, Sir Robert J. (Wrexham)


Bramsdon, Sir Thomas
Irving, Dan
Thomson, T. (Middlesbrough, West)


Briant, Frank
Jackson, Lieut.-Colonel Hon. F. S.
Thorne, G. R. (Wolverhampton, E.)


Bromfield, William
Jodrell, Neville Paul
Townley, Maximilian G.


Cairns, John
John, William (Rhondda, West)
Walsh, Stephen (Lancaster, Ince)


Campion, Lieut.-Colonel W. R.
Johnstone, Joseph
Ward-Jackson, Major C. L.


Carter, W. (Nottingham, Mansfield)
Jones, Morgan (Caerphilly)
Watts-Morgan, Lieut.-Col. D.


Cautley, Henry Strother
Kenyon, Barnet
Wheler, Col. Granville C. H.


Clay, Lieut.-Colonel H. H. Spender
Lawson, John James
White, Charles F, (Derby, Western)


Colvin, Brig.-General Richard Beale
Lort-Williams, J.
Wignall, James


Courthope, Lieut.-Col. George L.
Maclean, Rt. Hn. Sir D. (Midlothian)
Wilson, Col. M. J. (Richmond)


Davidson, Major-General Sir. J. H.
McNeill, Ronald (Kent, Canterbury)
Windsor, Viscount


Davies, A. (Lancaster, Clitheroe)
Mallalieu, Frederick William
Wintring ham, Margaret


Davies, Thomas (Cirencester)
Morrison-Bell, Major A. C.
Wolmer, Viscount


Edwards, C. (Monmouth, Bedwellty)
Myers, Thomas
Wood, Major M. M. (Aberdeen, C.)


Entwistle, Major C. F.
Naylor, Thomas Ellis



Falcon, Captain Michael
Newbould, Alfred Ernest
TELLERS FOR THE AYES.—


Finney, Samuel
Nicholson, Brig.-Gen. J. (Westminster)
Lieut.-Colonel Sir J. Hope and Mr. Turton.


Foot, Isaac
Pretyman, Rt. Hon. Ernest G.



Fraser, Major Sir Keith




NOES.


Agg-Gardner, Sir James Tynte
Chamberlain, N. (Birm., Ladywood)
Greene, Lt.-Col. Sir W. (Hack'y, N.)


Armstrong, Henry Bruce
Clough, Sir Robert
Greenwood, Rt. Hon. Sir Hamar


Baird, Sir John Lawrence
Cope, Major William
Greenwood, William (Stockport)


Balfour, George (Hampstead)
Cory, Sir J. H. (Cardiff, South)
Greig, Colonel Sir James William


Barker, Major Robert H.
Davidson, J. C. C. (Hemel Hempstead)
Gritten, W. G. Howard


Barlow, Sir Montague
Cockrell, Sir Maurice
Guest, Capt. Rt. Hon. Frederick E.


Barnes, Rt. Hon. G. (Glas., Gorbals)
Doyle, N. Grattan
Hacking, Captain Douglas H.


Barnston, Major Harry
Edgar, Clifford B.
Hamilton, Sir George C.


Barrie, Sir Charles Coupar (Banff)
Edwards, Allen C. (East Ham. S.)
Hannon, Patrick Joseph Henry


Bartley-Denniss, Sir Edmund Robert
Edwards, Major. J. (Aberavon)
Harmsworth, C. B. (Bedford, Luton)


Betterton, Henry B.
Edwards, Hugh (Glam., Neath)
Henderson, Lt.-Col. V. L. (Tradeston)


Birchall, J. Dearman
Elliott, Lt.-Col. Sir G. (Islington, W.)
Herbert, Dennis (Hertford, Watford)


Berwick, Major G. O.
Elveden, Viscount
Hinds, John


Bowerman, Rt. Hon. Charles W.
Evans, Ernest
Hopkins, John W. W.


Breese, Major Charles E.
Falle, Major Sir Bertram Godfray
Horne, Sir R. S. (Glasgow, Hillhead)


Broad, Thomas Tucker
Fell, Sir Arthur
Hurst, Lieut.-Colonel Gerald B.


Bruton, Sir James
George, Rt. Hon. David Lloyd
Inskip, Thomas Walker H.


Buckley, Lieut.-Colonel A.
Gibbs, Colonel George Abraham
Jephcott, A. H.


Bull, Rt. Hon. Sir William James
Gilmour, Lieut.-Colonel Sir John
Johnson, Sir Stanley


Carr, W. Theodore
Gray, Major Ernest (Accrington)
Jones, G. W. H. (Stoke Newington)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Green, Joseph F. (Leicester, W.)
Jones, J. T. (Carmarthen, Llanelly)


Kidd, James
Perring, William George
Taylor, J.


King, Captain Henry Douglas
Pownall, Lieut.-Colonel Assheton
Thomson, F. C. (Aberdeen, South)


Lewis, Rt. Hon. J. H. (Univ., Wales)
Preston, Sir W. R.
Thorpe, Captain John Henry


Lewis, T. A. (Glam., Pontypridd)
Prescott, Major Sir W. H
Tryon, Major George Clement


Lindsay, William Arthur
Ratcliffe, Henry Butler
Wallace, J.


Lloyd, George Butler
Remer, J. R.
Walters, Rt. Hon. Sir John Tudor


Locker-Lampson, G. (Wood Green)
Renwick, Sir George
Walton, J. (York. W. R., Don Valley)


McCurdy, Rt. Hon. Charles A.
Roberts, Rt. Hon. G. H. (Norwich)
Ward, Col. J. (Stoke-upon-Trent)


Macdonald, Rt. Hon. John Murray
Roberts, Sir S. (Sheffield, Ecclesall)
Ward, Col. L. (Kingston-upon-Hull)


Mackinder, Sir H. J. (Camlachie)
Robinson, S. (Brecon and Radnor)
Warner, Sir T. Courtenay T.


McLaren, Robert (Lanark, Northern)
Roundels, Colonel R. F.
White, Col. G. D. (Southport)


Macquisten, F. A.
Sanders, Colonel Sir Robert Arthur
Wild, Sir Ernest Edward


Magnus, Sir Philip
Scott, A. M. (Glasgow, Bridgeton)
Williams, C. (Tavistock)


Marks, Sir George Croydon
Scott, Sir Leslie (Liverp'l, Exchange)
Williams. Col. P. (Middlesbrough, E.)


Mason, Robert
Seddon, J. A.
Wilson, Rt. Hon. J. W. (Stourbridge)


Morden, Col. W. Grant
Shaw, Hon. Alex. (Kilmarnock)
Wise, Frederick


Moreing, Captain Algernon H.
Shunt, Rt. Hon. E. (N'castle-on-T.)
Wood, Sir H. K. (Woolwich, West)


Murray, John (Leeds, West)
Simm, M. T.
Wood, Major Sir S. Hill-(High Peak)


Neal, Arthur
Stanley, Major Hon. G. (Preston)
Worthington-Evans, Rt. Hon. Sir L.


Newman, Sir R. H. S. D. L. (Exeter)
Stanton, Charles Butt
Yeo, Sir Alfred William


Norris, Colonel Sir Henry G.
Stephenson, Lieut.-Colonel H. K.
Younger, Sir George


Norton-Griffiths, Lieut.-Col. Sir John
Strauss, Edward Anthony



Parry, Lieut.-Colonel Thomas Henry
Sturrock, J. Long
TELLERS FOR THE NOES.—


Pease, Rt. Hon. Herbert Pike
Sugden, W. H.
Colonel Leslie Wilson and Mr. Dudley Ward.


Pennefather, De Fonblanque
Sutherland, Sir William



Perkins, Walter Frank
Sykes, Sir Charles (Huddersfield)



Question, "That the Clause be read a, Second time," put, and agreed to.

Division No. 187.]
AYES.
[12 m.


Banton, George
Harmsworth, Hon. E. C. (Kent)
Poison, Sir Thomas A.


Barker, G. (Monmouth, Abertillery)
Hayday, Arthur
Randall, Athelstan


Barnes, Major H. (Newcastle, E.)
Hayward, Evan
Richardson, Lt.-Col. Sir P. (Chertsey)


Bowerman, Rt. Hon. Charles W.
Henderson, Lt.-Col. V. L. (Tradeston)
Richardson, R. (Houghton-le-Spring)


Briant, Frank
Herbert, Col. Hon. A. (Yeovil)
Royce, William Stapleton


Bromfield, William
Holbrook, Sir Arthur Richard
Seddon, J. A.


Bruton, Sir James
Holmes, J. Stanley
Stanton, Charles Butt


Cairns, John
James, Lieut.-Colonel Hon. Cuthbert
Swan, J. E.


Carter, W (Nottingham, Mansfield)
Jodrell, Neville Paul
Thomson, T. (Middlesbrough, West)


Churchman, Sir Arthur
John, William (Rhondda, West)
Thorne, G. R. (Wolverhampton, E.)


Collins, Sir Godfrey (Greenock)
Jones, G. W. H. (Stoke Newington)
Walsh, Stephen (Lancaster, Ince)


Curzon, Captain Viscount
Jones, Morgan (Caerphilly)
Walton, J. (York, W. R., Don Valley)


Davidson, Major-General Sir J. H.
Kenworthy, Lieut.-Commander. J. M.
Ward, Col. L. (Kingston-upon-Hull)


Davies, A. (Lancaster, Clitheroe)
Kidd, James
Ward-Jackson, Major C. L.


Davies, Thomas (Cirencester)
Kiley, James Daniel
Watts-Morgan, Lieut.-Col. D.


Dawson, Sir Philip
Lawson, John James
White, Charles F. (Derby, Western)


Doyle, N. Grattan
Lort-Williams, J.
White, Col G. D. (Southport)


Edwards, C. (Monmouth, Bedwellty)
McNeill, Ronald (Kent, Canterbury)
Wignall, James


Entwistle, Major C. F.
Mallalieu, Frederick William
Williams, Penry (Middlesbrough, E.)


Finney, Samuel
Manville, Edward
Young, Sir Frederick W. (Swindon)


Foot, Isaac
Moore-Brabazon, Lieut.-Col. J. T. C.



Faxcroft, Captain Charles Talbot
Myers, Thomas
TELLERS FOR THE AYES.—


Goulding, Rt. Hon. Sir Edward A.
Naylor, Thomas Ellis
Mr. Hannan and Lieut.-Colonel Nall.


Gretton, Colonel John
Newbould, Alfred Ernest



Grilles, W. G. Howard
Newman, Sir R. H. S. D. L. (Exeter





NOES.


Agg-Gardner, Sir James Tynte
Goff, Sir R. Park
Remer, J. R.


Amery, Rt. Hon. Leopold C. M. S.
Green, Joseph F. (Leicester, W.)
Roberts, Rt. Hon. G. H. (Norwich)


Armitage, Robert
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Roberts, Samuel (Hereford, Hereford)


Armstrong, Henry Bruce
Greenwood, Rt. Hon. Sir Hamar
Robinson, S. (Brecon and Radnor)


Baird, Sir John Lawrence
Greenwood, William (Stockport)
Rose, Frank H.


Baldwin, Rt. Hon. Stanley
Greig. Colonel Sir James William
Roundell, Colonel R. F.


Banbury, Rt. Hon. Sir Frederick G.
Guest, Capt. Rt. Hon. Frederick E.
Royds, Lieut.-Colonel Edmund


Barker, Major Robert H.
Hacking, Captain Douglas H.
Sanders, Colonel Sir Robert Arthur


Barlow, Sir Montague
Harmsworth, C. B. (Bedford, Luton)
Sessoon, Sir Phillip Albert Gustave D.


Barnston, Major Harry
Hennessy. Major J. R. G.
Scott, A. M. (Glasgow, Bridgeton)


Beckett, Hun. Sir Gervase
Herbert, Dennis (Hertford, Watford)
Scott, Sir Leslie (Liverp'l, Exchange)


Bantinck, Lord Henry Cavendish-
Hinds, John
Seely, Major-General Rt. Hon. John


Bigland, Alfred
Hope, J. D. (Berwick & Haddington)
Shaw, Hon. Alex, (Kilmarnock)


Birchall, J. Dearman
Hopkins, John W. W.
Shortt, Rt. Hon. E. (N'castle-on-T.)


Bird, Sir William B. M. (Chichester)
Horne, Sir R. S. (Glasgow, Hillhead)
Smith, Sir Allan M. (Croydon, South)


Borwick, Major G. O.
Hunter, General Sir A. (Lancaster)
Smith, Sir Harold (Warrington)


Boscawen, Rt. Hon. Sir A. Griffith-
Inskip, Thomas Walker H.
Stanley, Major Hon. G. (Preston)


Bowyer, Captain G. W. E.
Jackson, Lieut.-Colonel Hon. F. S.
Starkey, Captain John Ralph


Breese, Major Charles E.
Jephcott, A. R.
Steel, Major S. Strang


Bridgeman, Rt. Hon. William Clive
Johnstone, Joseph
Stephenson, Lieut.-Colonel H. K.


Broad, Thomas Tucker
Jones, J. T. (Carmarthen, Llanelly)
Sturrock, J. Leng


Brown, Brig.-Gen. Clifton (Newbury)
Kellaway, Rt. Hon. Fredk. George
Sugden, W. H.


Buckley, Lieut.-Colonel A.
King, Captain Henry Douglas
Sutherland, Sir William


Bull, Rt. Hon. Sir William James
Lane-Fox, G. R.
Sykes, Sir Charles (Huddersfield)


Burdon, Colonel Rowland
Lewis, T. A. (Glam., Pontypridd)
Terrell, George (Wilts, Chippenham)


Campion, Lieut.-Colonel W. R.
Lindsay, William Arthur
Thomas, Sir Robert J. (Wrexham)


Carr, W. Theodore
Lorden, John William
Thomson, F. C. (Aberdeen, South)


Cecil, Rt. Hon. Sir Evelyn (Aston)
Mackinder, Sir H. J. (Camlachie)
Thomson, Sir W. Mitchell- (Maryhill)


Chamberlain, N. (Birm., Ladywood)
McLaren, Hon. H. D. (Leicester)
Townley, Maximilian G


Churchill, Rt. Hon. Winston S.
McLaren, Robert (Lanark, Northern)
Tryon, Major George Clement


Clay, Lieut.-Colonel H. H. Spender
Marks, Sir George Croydon
Turton, Edmund Russborough


Clough, Sir Robert
Marriott, John Arthur Ransome
Wallace, J


Coats, Sir Stuart
Mason, Robert
Walters, Rt. Hon. Sir John Tudor


Colvin, Brig.-General Richard Beale
Mildmay, Colonel Rt. Hon. F. B.
Ward, William Dudley (Soughampton)


Cory, Sir. J. H. (Cardiff, South)
Mitchell, Sir William Lane
Waring, Major Walter


Courthope, Lieut.-Col. George L.
Mond, Rt. Hon. Sir Alfred Moritz
Warner, Sir T. Courtenay T.


Davidson, J. C. C. (Hemel Hempstead)
Montagu, Rt. Hon. E. S.
Watson, Captain John Bertrand


Davies, David (Montgomery)
Moreing, Captain Algernon H.
Weston, Colonel John Wakefield


Davies, Sir William H. (Bristol, S.)
Morrison, Hugh
Wheler, Col Grenville C. H.


Davison, Sir W. H. (Kensington, S.)
Morrison-Bell, Major A. C.
Williams, C. (Tavistock)


Ednam, Viscount
Munro, Rt. Hon. Robert
Wills, Lt.-Col, Sir Gilbert Alan H.


Edwards, Major J. (Aberavon)
Murchison, C. K.
Wilson, Col. M. J. (Richmond)


Edwards, Hugh (Glam., Neath)
Murray, Rt. Hon. C. D. (Edinburgh)
Windsor, Viscount


Evans, Ernest
Murray, John (Leeds, West)
Wise, Frederick


Eyres-Monsell, Com. Bolton M.
Neal, Arthur
Wolmer, Viscount


Falcon, Captain Michael
Nicholson, Brig.-Gen. J. (Westminster)
Wood, Hon. Edward F. L. (Ripon)


Falle, Major Sir Bertram Godfray
Nicholson, Reginald (Doncaster)
Wood, Sir H. K. (Woolwish, West)


Fisher, Rt. Hon. Herbert A. L.
Pease, Rt. Hon. Herbert Pike
Wood, Major Sir S. Hill (High Peak)


FitzRoy, Captain Hon. Edward A.
Perkins, Walter Frank
Worthington-Evans, Rt. Hon. Sir L.


Fraser, Major Sir Keith
Pollock, Rt. Hon. Sir Ernest Murray
Younger, Sir George


Ganzoni, Sir John
Pretyman, Rt. Hon. Ernest G.



George, Rt. Hon. David Lloyd
Purchase, H. G.
TELLERS FOR THE NOES.—


Gibbs, Colonel George Abraham
Rae, Sir Henry N.
Colonel Leslie Wilson and Mr. McCurdy.


Gilmour, Lieut.-Colonel Sir John
Raw, Lieutenant-Colonel Dr. N.

NEW CLAUSE.—(Entertainments Duty.)

Notwithstanding anything in Section one of the Finance (New Duties) Act. 1916, as amended by any subsequent enactment. Entertainments Duty shall not be charged for admission to any entertainment where the Commissioners of Customs and Excise are satisfied that the whole of the profits thereof are devoted to philanthropic or charitable purposes.—[Mr. Rose.]

Brought up, and read the First time.

Mr. ROSE: I beg to move, "That the Clause be read a Second time."
I am in some trepidation in moving this. I think the Chancellor of the Exchequer has existing somewhere something in the nature of a benevolent fund, though we know it is not of very considerable dimensions. I can only hope he has enough left to do what we are asking in this proposed Clause. I consider it to be an act simple justice, if not a matter of simple propriety. The object of this Amendment is to exempt from Entertainments Duty all such entertainments as are bonâ fide for charitable objects As the law stands to-day, as T understand it, Entertainments Duty is not payable on entertainments the profits of which are entirely devoted to charitable or philanthropic objects. If the promoters of charitable entertainments have to pay artists or attendants they have to pay the Entertainments Duty. I do not know what this proposal will cost. I suppose that is generally the determining factor in a matter of this sort. But whether it costs much or little I do not for a moment care. I am not appealing to the sentiments or the sympathy of the Chancellor of the Exchequer. I do not believe in a sympathetic Chancellor of the Exchequer.

Sir R. HORNE: Hear, hear!

Mr. ROSE: If you find the Chancellor of the Exchequer sympathetic, be sure he is not fit for his job. The right hon. Gentleman is a respectable man, and that is all I am asking him to he. That is the only trait in his character that at present I am asking him to justify. If people get up entertainments of the kind referred to in the proposed new Clause, if they want to be exempt from Entertainments Duty, they have to find some even more benevolent persons who will stand the whole of the expenses; then they can be free. This request comes from a very important town in Scotland which I have the honour to represent. The particulars I am about to give I think are typical, but not peculiar.
The District Hospitals Fund Association of Aberdeen during the last year got up entertainments and were able to pay to the local hospitals, infirmaries, dispensaries, nursing associations, and so forth, £1,000; but they had also to pay Entertainments Duty to the extent of £232. That does not seem to me to be quite the right thing. I daresay the Chancellor will say that he cannot accept my proposal because it would mean a reduction of, roughly, 25 per cent. of the money realised. He will probably say that that sort of thing spread over the kingdom would mean a considerable sum lost to him. I do not know whether that is so or not. The Chancellor may have figures from which he can tell us the cost of this proposal. Frankly, I do not care a bit what it costs. It is something which seems to me ought to be done. It is not.
right, after all—and I suppose right and wrong do sometimes enter into the consideration even of Cabinet Ministers—when these entertainments are got up for the purpose of raising money for helping the poor, the infirm, the sick and ailing, it is utterly wrongful and utterly improper for such money or enterprises to be taxed. I am not going to supplicate the Chancellor of the Exchequer. I have heard so many Members hope that the Chancellor will be so good or so considerate as to make certain concessions. I do not put it that way. I merely state the case, and leave it to the good sense of the right hon. Gentleman.

Sir D. MACLEAN: On a point of Order. May I ask, Mr. Hope, whether the Debate on this proposed new Clause excludes the Debate on the next proposed new Clause, standing in the name of the hon. and gallant Gentleman the Member for Howdenshire (Lieut.-Colonel Jackson), which seeks to exempt sports clubs under specified conditions? In the one case the Clause speaks of philanthropic or charitable purposes, and in the other, games, athletic exercises, physical recreation, etc. Whatever difference there may be in the immediate objectives of the two proposed Clauses, the Debate will run in much the same way, and I was wondering whether the Division upon the first would exclude discussion upon the second. It seems to be of wider scope and open to more detailed argument.

The CHAIRMAN: No. The Debate on the first proposed Clause will be confined to charity, and on the second to sport.

Sir E. BARTLEY-DENNISS: I imagine that most, if not all of us, have been pestered by, principally, the clergy in our constituencies to move the Chancellor, so far as posible, into giving some relief in this matter. Might I suggest that if the right hon. Gentleman cannot take off the tax, he might make the deduction for expenses on a more liberal scale? At the present moment it is 20 per cent.

Sir R. HORNE: I was a little startled at the beginning of the speech of the hon. Member for North Aberdeen (Mr. Rose) and his references to the Chancellor of the Exchequer, but when I remember the part of the country which he represents I readily understood. I do not think that he has yet entirely acquired the habit of
those whom he represents. He seems to have missed the most important point in connection with the imposition of the Entertainments Duty which has just been elucidated by my hon. Friend the Member for Oldham (Sir E. Bartley-Denniss). The assumption of the Mover of this Clause was that at the present time no allowance is made for any of the expenses incurred by promoters of entertainments for philanthropic and charitable purposes, but that is not so. Originally it was provided that only those entertainments in regard to which the whole proceeds were given to the charity were exempt from the duty, but that has been modified to the effect that where not more than 20 per cent of the proceeds has been spent upon expenses in such a case the entertainment shall be exempted from the duty.
The suggestion of my hon. Friend the Member for Oldham is that the allowance in regard to expenses should be increased, and I am willing to accede to that suggestion. I cannot, however, go so far as my hon. Friend desires, because that would mean the loss of much more money than the people of his constituency would think wise on the part of the Chancellor of the Exchequer, but I am certainly moved by the representations made to me to the effect that many quite justifiable philanthropic and charitable objects are defeated in the chance of holding profitable entertainments because of the fact that the expenses cannot be kept within the narrow limits at present imposed. I have gone into the figures, and I have come to the conclusion that we ought to increase the amount from 20 per cent. to 30 per cent. I think by that increase we shall really meet the most deserving cases.
I beg my hon. Friend to notice that, in doing this, I am not departing from the high standard of unsympathetic Chancellors of the Exchequer whom he desires me to follow. I anticipate by making this slight advance in the percentage of expenses which will be allowed that I shall in connection with the hospitals be likely to escape from burdens which might possibly be imposed upon the Treasury. T am doing this with an entirely selfish object, and whilst it may cost £50,000 to perform this operation, I expect to be more than recouped by the advantageous results of the suggestion I am making to the House. If my hon.
Friend will consent to withdraw his particular proposal I will put down on the Report Stage a Clause which will give the increased allowance for expenses to which I have referred.

Mr. ROSE: After what the right hon. Gentleman has said I ask leave to withdraw my Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Amendment of 6 George V., c. 11, s. 1.)

Section one, Sub-section (4), paragraph (a), of the Finance (New Duties) Act, 1916, shall read as though there were inserted at the end of Section one, paragraph (a), the words:

Provided that this Section shall not apply to subscription of members, paid by means of a lump sum, of sports clubs whose whole income is diverted to the promotion of games, athletic exercises, or physical recreation, and when no profit or surplus is or has been distributed as dividends or bonus.

—[Lieut.-Colonel Jackson.]

Brought up, and read the First time.

Lieut.-Colonel JACKSON: I beg to move, "That the Clause be read a Second time."
The object of this Clause is to amend the Finance (New Duties) Act, 1916, so far as it applies to the assessment of the subscriptions of members of clubs and associations which are paid by means of a lump sum. Sub-section (4) of Section 1 of that Act, when the subscription of clubs and associations is paid by means of a lump sum, and when a charge is made for admission, allows certain rates for the Entertainments Duty. It is felt that this method of taxing members' subscriptions bears hardly and somewhat unfairly especially upon small clubs and, associations whose whole revenue is spent and devoted to the promotion of sports and exercises and physical recreation. The new Clause proposes to exempt from this duty members' subscriptions of clubs run solely for this purpose and where no profit is distributed in any way whatever.
10.0 P.M.
My appeal for favourable consideration is based upon the necessity for promoting the physical well-being of multitudes of young people in this country. It is generally acknowledged that a reasonable indulgence in games and athletics is not only de-
sirable but really is of some considerable national importance. I believe it has been proved beyond doubt that unencumbered opportunities of indulgence in sports, games and athletics has had a beneficial influence not only upon the health and physique of the manhood of the country, but also on the character of the people. I make a special appeal in the interests of small clubs and associations. Those who have had experience of running these small clubs know the enormous difficulty of running them with any sort of success merely by the aid of members' subscriptions. They have to make both ends meet, and in order to do that they have to depend upon public assistance, and this assistance is obtained by matches and competitions of one kind and another where a small charge is made for admission. This small charge naturally means that the subscriptions of the members are liable to assessment for Entertainments Duty.
The result of these enterprises generally means that there is a deficit for these small clubs. I have a kind of idea that many hon. Members have occasionally had some sort of requests to make up these small deficits. This deduction by a tax of the sum paid for members' subscriptions has this effect that economies have to be made in consequence and I have heard of several instances where the sum of £15 or £20 has had to be paid in Entertainments Duty when this is the sum that has usually been paid to some man for his services during three or four months of the year in connection with the ground, and they find that they have not this money with the result that they have to dispense with the services of that man who may be some pensioner or some old man who in his time has been a great sportsman. The result is that he has to leave his job and the ground deteriorates. That is not all because when members are asked to pay another ten shillings upon their subscription I am told they often find it not only very difficult to get. new members but they are likely to lose some of their Gld members on this account. I am not opposed to the principle of an Entertainments Duty, and I do not think sportsmen in general are opposed to it because they desire to do all they can to meet the difficulties of the times. I believe the Entertainments Duty in these hard times is a fairly reasonable and just way of raising revenue.
but I have always found it hard to appreciate the soundness of the principle of taxing the means of providing an entertainment which produces the duty. Members subscriptions are the direct means of the provision of the opportunity of sporting recreation, and of the entertainment of those who go there merely to watch and who pay at the gate. If the Chancellor of the Exchequer wants the goose to go on laying golden eggs, it is not wise for him to cut off its food. In my judgment, when subscriptions are paid by means of a lump sum, it is inequitable to charge the Entertainments Duty on them. Lots of people have to pay the duty who never have an opportunity of seeing an entertainment, and, therefore, they really pay for something they practically never get. It is well known that members often subscribe to these clubs for the purpose of keeping the club going and do not get an opportunity to enjoy recreation on the club premises. They do not subscribe, therefore, for the entertainment which they get out of the club. Old playing members who have finished their active course, go on supporting the club, and seek to keep it going for the benefit probably of their sons and daughters.
I know that many appeals are made and are bound to be made to the Chancellor of the Exchequer for relief from this Entertainments Duty, and many of them are reasonable. But there is something about my proposal which I think differs it from other proposals. I make my appeal in the interests of those who, through these clubs, desire to actively participate in the recreation which these dubs supply by encouraging opportunities for play and recreation. I believe, and I think we all believe, it produces that health and contentment which assist considerably towards efficiency in work. Efficiency in work goes towards making up the prosperity of this country, and the prosperity of the country is by far the most fruitful source of revenue to which any Chancellor of the Exchequer can look. I hope my right hon. Friend may be able to give favourable consideration to this Clause. I have a feeling, having the privilege of his acquaintance, that if he follows his own inclination there can be no doubt that he will accept it, but he may possibly be
diverted from so doing by the fact that he is faced with a financial situation over which he has no control.

Sir R. HORNE: There is no Member of this House who has more right to propose this Clause than the hon. and gallant Gentleman who has just spoken, nor is there anyone who should be listened to with so much respect on the topic on which he has discoursed. His speech has been so moderate in character that I think the views he has represented will naturally meet the appreciation of all of us. But for the reasons I am now going to state to the Committee I regret very much I am not in a position to accept this proposal, not so much because of what it contains, but rather because of the effect it will have on the ramifications of the Entertainments Duty. If we are to make this particular exception I do not see at the moment where the exceptions can be ended. Let me remind the Committee of the position of this tax in relation to sports clubs at the present time. If there is any playing member who pays his subscriptions in a lump sum, he is entirely exempt from any imposition of the Entertainments Duty on any portion of his subscription. On the other hand, in the case of a non-playing member only so much of the subscription as may be regarded as representing what he pays for admission to the ground at all times is held to be subject to the Entertainments Duty. In that way a large part of the subscription of non-paying members of sports clubs is held to be exempt from the duty. If one were to carry the matter further, and say that all subscriptions to sports clubs should be exempt from duty, it is easy to see what the result would be. People would take up membership cards which would entitle them to free entry to all matches in which the club is interested, mid then the Entertainments Duty would almost entirely disappear in such cases. Take the case of a football club from which possibly the largest amount of revenue is derived from the Entertainments Duty. People supporting that club are on the club ground practically every Saturday, and all they have to do accordingly is to join the club for that purpose and get a season ticket for admission to the club ground to witness the matches. Thousands of people who never play the game could do that, and in that way the object of the Entertainments
Duty would be entirely defeated. Indeed, I cannot see how, if I adopted the suggestion of the hon. Member, one could discriminate between the spectators who pay at the gate and those who pay by a lump sum a subscription to the club for the year. Under these circumstances I fear it is impossible for me to do as my hon. Friend suggests.
But I would say this. He has stated there are many members who keep up their subscriptions to clubs for the purpose of maintaining them in existence, and who never enter on the club premises at all. The Customs officials have a discretion conferred on them by Statute in dealing with the subscriptions of members as to the amount of the subscription which shall be subject to the duty. In any case, where in fact it is true that a member take's out a membership card, not for the purpose of attending the club premises, but rather in order to support the institution, I can assure my hon. Friend that the instructions of the Department are that every possible consideration should be extended in those cases, and that a generous view should be taken of the position. I should myself think that the result would be that in cases where it is reasonably clear that subscriptions are paid, not for the purpose of obtaining entrance to the club premises, but for the purpose of maintaining its existence, in such cases no part of the membership subscription would become subject to the duty. I think that is really as far as I can go in the matter.

Mr. R. McNEILL: Could the right hon. Gentleman say how that would be effected?

Sir R. HORNE: The machinery is in existence. For example, if I might just repeat what I said, it is the duty of the Customs officers to come to a conclusion with the representatives of the club as to how much of the subscription could really be allotted to the privilege of entrance to the grounds of the club, and, since they have that task to carry out in any case, it is equally simple, in dealing with the secretary of the club when that arrangement is being made, to discover—of course, it will not be very meticulous—what membership subscriptions are really paid without any real desire to enter the club premises at all. I have discussed
the matter, and have no doubt as to its possibility.

Mr. McNEILL: Does that mean in the case of each individual member?

Sir R. HORNE: It will be possible to arrive at a rough calculation. These rough calculations must be made in the administration of a duty of this kind, and I have no doubt that it is quite feasible.

Sir D. MACLEAN: I hope that my hon. and gallant Friend, who moved this Clause in a speech which found general acceptance throughout the Committee, will press the right hon. Gentleman a little more closely than he has done to-night, in order to achieve the object he has in view. What the Chancellor of the Exchequer said he said, of course, with perfect good will and with a desire to carry into effect the concession he has given, but the experience, unfortunately, of all Members of the House of Commons in regard to Chancellors of the Exchequer of all parties who, I will not say have given undertakings, but have expressed good will, has not been particularly happy in the way in which it has worked out, and I really think, if I might make the suggestion, without any disrespect to the Chancellor at all, that between now and Report, my hon. and gallant Friend should endeavour to see how far the proposal can be reduced to working with the authorities, and it might be put down on Report. Of course we do not desire to press this Clause at all, after what the Chancellor of the Exchequer bas said about the obvious way in which it would lead to very large evasions of tax, but this concession is one which would be difficult to administer, and, in so far as it is practicable to do it, I hope that by the time the Report stage arrives, the House will be in possession of rather more particular information as to bow it is to be carried out than is available at present.

Mr. LINDSAY: The Chancellor of the Exchequer based his argument against this Clause on the plea that great revenue was derived from what are really professional football clubs, and, of course, that revenue is very large. He overlooks the fact that this Clause only applies to clubs which do not distribute dividends, but all the big association grounds are owned by clubs which are really limited companies, run for profit, and paying dividends.

Sir R. HORNE: There are a great many clubs which distribute no dividend at all.

Mr. LINDSAY: As a very old football player, I must claim to know more about it than does the right hon. Gentleman, and I think that if he will take the trouble to investigate the matter he will find that what I am saying is correct. Therefore, I submit that as far as that is concerned, his contention has entirely failed.

Mr. BRIANT: I do not think that even now the Chancellor of the Exchequer fully appreciates the real effect of this tax. He seems to imply that unless there is revenue from admission charges there is no tax at present, but that is not so. Clubs which have no entrance fee whatever are being taxed at the present moment, and are being asked for the tax. Even where there is no gate, and not a farthing is charged, claims are made by the Inland Revenue Department for so much in respect of each member. If the right hon. Gentleman has forgotten, I can fortify his memory by reminding him that, as late as the 15th June, the Department wrote as follows:
In view of the fact that non-playing members are not entitled to take part in any game, and have, in virtue of their subscriptions, the privilege of watching games from which non-members other than the friends of members are excluded, the Commissioners have no alternative but to regard seine portion of such subscriptions as representative of admission fees.
There is no charge for admission to anyone. The Inland Revenue has drawn up a list that they are going to charge even where only friends are admitted. I could show the right hon. Gentleman a long correspondence with a well-known club in which the Inland Revenue not only claim for the present year, but ask them to send in an account for the three pre- vious years, and demand for that time certain payments of which they had drawn up a long list. I do not think the right hon. Gentleman understands how this affects the smaller clubs. The Duke of York yesterday took the chair at a meeting in reference to the Industrial Council, which has for its object to assist sport among the working people connected with factories. That very Council has written to me repeatedly complaining of the action taken by the Inland Revenue. There is an Old Boys' Union at Port Glasgow. They pay half a crown for the whole year and the Inland Revenue demands 2d. out of each
half-crown because the boys play some sort of game and go to meetings where at the end of, say, a lecture a few lads may sing a song. They are charged Entertainments Duty, although next door there may be a dance where an orchestra may be paid £25 for playing, and because in theory when you dance you do not amuse anyone else, except your partner, you escape the Duty. The Port Glasgow Boys' Union got nervous. They had down on their membership card at one time that they would have a Church parade. They wondered if it would be chargeable, and they wrote and got a reply that the Church parade would be exempted from the Duty if there was no music or singing.
The right hon. Gentleman has been very busy with more important items in his Budget, and has probably not been able to give time to the details of this. I have been overwhelmed in the last twelve months with letters about the ridiculous impediments put in the way of small clubs. We do not object in the slightest to payment of duty on the man who comes in and pays at the door. Every hon. Member knows full well the number of times he has to be an honorary member in order to support a club in which he is interested, and yet so keen are the Inland Revenue on getting duty that you are only allowed to go on to the ground without paying it so long as there is nothing going on. I do not think the right hon. Gentleman can have examined the correspondence, which I should be pleased to show him, from his own Department. I appeal on behalf of many hundreds of small clubs with which, in one way or another, I have been associated. To the working lad and the working man this is a matter of first importance, and it is also of first importance to the nation. I hold no brief for professional sport because sport in the end will depend upon amateur sport, for which I appeal. I hope the Chancellor of the Exchequer will give further consideration to this question, and examine the archives of his Department, and some of the mysterious letters which some members of his staff have time to write. I trust that he will see that there is a real case for some more drastic concession than he has suggested. There is already in existence some method by which a certain amount is allocated. That is already done, but that does not meet
the case. I ask for something much more drastic in order to meet a real want and a real grievance amongst hundreds and thousands of young fellows, whose sport is the one entertainment and the most important recreation of the week.

Colonel LAMBERT WARD: I ask for an assurance from the Chancellor of the Exchequer that he will instruct his officers to give a more lenient rendering of the letter of the law, which he has promised in the case of some clubs, to the case of the National Rifle Association. It may be news to a great many hon. Members that the National Rifle Association is actually charged Entertainments Duty. It is a most extraordinary thing that it should be so. Rifle shooting is not an entertainment. The only entertainment that ever takes place at Risley is the annual match between Members of this House and representatives of the Chamber at the other end of the corridor. I have shot in that match, so I ought to know. The work that the National Rifle Association has done in the past for rifle shooting is well known. Eight years ago, when rifles were so much required, no one could speak too highly of the work that had been done by the National Rifle Association in training men to defend this country. Amongst the things the National Rifle Association has done may be mentioned the evolution of the modern small-bore rifle, a weapon with which all civilised countries are now armed. The evolution of that was entirely due to the scientific side of the National Rifle Association.
At the present time, the National Rifle Association, and the riflemen of this country through the association, are called upon to pay Entertainments Tax for the work that they do. Subscriptions, which are sent to the National Rifle Association, are not sent for the privilege of going to look at rifle shooting. No one would go to look at rifle shooting as an entertainment. It is one of the dullest things that one could possibly imagine. The subscriptions are sent to encourage rifle shooting throughout the Kingdom. The subscriptions go to that object and are sent for that purpose and no other. A certain amount of gate money has been collected during the past few years, but that has not been for
letting people in, but rather for the purpose of keeping people out. At Bisley, during the meeting, as is customary in connection with functions of that kind, a very large number of undesirable people collect, and it is necessary to fence in the ground so that the men who are in camp there, under canvas, may not have their equipment and their things stolen by these very undesirable characters. The expense of fencing in the camp has hitherto been met by the small sum which is charged to the few people who go in. Rifle shooting to-day is every iota as important to this country as archery was in the Middle Ages. In the Middle Ages people were not taxed for practising archery. On the contrary, they were taxed for not practising archery. Anybody who did not practice archery on every Sunday was fined ld., which was a considerable sum in those days. This concession will cost nothing this year, because arrangements have already been made that no entrance fee shall be charged at the gate. Rather than submit to the clerical work entailed in filling in all the forms which have to be sent in, it has been decided this year to dispense with gate money. Should gate money be charged in some other year, then taking into account the subscriptions which people might send in to encourage rifle shooting throughout the country, it is possible that the Exchequer might lose between £25 and £30 in a year. If the Chancellor of the Exchequer cannot afford that sum to encourage rifle shooting, so that people may learn to defend their country, it is time that we got a more patriotic Chancellor of the Exchequer.

Major Sir KEITH FRASER: I did not expect the Chancellor of the Exchequer to accept this Clause. I felt that he was up against a number of ramifications and that if he had accepted it these ramifications would have sprouted on every branch. But I think that the Chancellor of the Exchequer must make a start—whether he makes it over rifle shooting or cricket does not matter. I say with all respect that he has got to get a move on. I am a strong supporter of the Coalition. I realise fully the terrible legacy which was left with the Coalition by the former Government in the matter of finance, to say nothing of the Irish situation to-day. I realise that the Co-
alition Government has many difficulties but it has got to make a start. The Chancellor of the Exchequer should put on his considering cap. Taxation in this country is most unjust to every class.

The CHAIRMAN: These general observations would seem to be more appropriate to the Second Reading of the Finance Bill than to this particular Amendment.

Sir K. FRASER: I know that I am not quite in order. There is a certain amount of trouble in Ireland just now. But the present system of taxation in this country is far worse than anything which Sinn Fein has done.

The CHAIRMAN: The hon. and gallant Member should address himself to the Amendment.

Sir K. FRASER: I do not intend to take up the time of the Committee. [HON. MEMBERS: "Go on!"] I ask the Chancellor of the Exchequer to accept this Clause as a start. Let us begin from now on a new basis, and when the next Finance Bill is introduced, we must have a new system of taxation. First of all, let the Chancellor of the Exchequer bear in mind our national game, cricket. You cannot educate the youth of the country better than by teaching them cricket.

Lieut.-Colonel JACKSON: After the speech we have just heard I feel that the Chancellor of the Exchequer may have been moved further than by any previous speeches on this Clause. I appreciate very much the suggestion of the right hon. Member for Peebles (Sir D. Maclean) that one might be allowed to meet the Inland Revenue authorities for the purpose of trying to get from the Chancellor of the Exchequer a concession on this particular point. It happens that I once made some remarks on this subject when another right hon. Gentleman was Chancellor of the Exchequer, and it was then suggested that I should take that course. I had the privilege of accompanying various deputations from the people interested, with the result that some considerable advantage was got and no one was particularly hurt by it. I was impressed by and obliged for the very sympathetic tone of my right hon. Friend in offering to do what he can to meet our request. If the Committee will allow me,
I would prefer now to withdraw the Amendment and depend upon the undertaking which the Chancellor of the Exchequer has given most definitely—an undertaking in which I trust absolutely.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Profits of charitable and other companies registered without word "limited" exempted from Corporation Profits Tax.)

(1) Corporation Profits Tax shall not he charged on the profits of an association which is registered under Section twenty of the Companies (Consolidation) Act, 1908, as a company with limited liability without the addition of the word ' limited ' to its name, so long as it continues so registered.
(2) This Section shall be deemed to have had effect as from the first clay of January, nineteen hundred and twenty-two.—[Sir E. Bartley-Dennis.]

Brought up, and read the First time.

Sir E. BARTLEY-DENNISS: I beg to move, "That the Clause be read a Second time."
The associations which are affected are such associations as chambers of commerce, university colleges and various other educational institutions, such as the Science and Art Society, also associations like the Air League and Navy League, and others which are incorporated under the Companies Act. They are associations which make no profit, and do not use the word "limited" after their name. As the tax is a Corporation Profits Tax, and as one of the conditions under which they are registered is that they are not to make a profit, it is rather an absurdity to tax the subscriptions that they receive as if they were profits. On that ground alone such an anomaly ought not to remain any longer on the Statute Book. Chambers of Commerce, for instance, have sometimes a balance in hand from their subscriptions, which are their sole source of income. That balance the Inland Revenue authorities regard as profit. It is nothing of the kind. I ask the Chancellor of the Exchequer kindly to consider whether the time has not arrived when an anomaly of this kind should be abolished. It will not cost much to adopt this proposal, and it will remove a clear injustice and an anachronism. At present, this is a tax upon the profits of companies which make no profits,
which by law cannot make profits, and which cease to exist as such if they do make profits.

Sir R. HORNE: I am prepared to accept this Clause. The sum involved is comparatively small, and I think the Clause only brings law into proper harmony with reason.

Clause read a Second time, and added to the Bill.

CLAUSE.—(Private brewers' licences.)

The following provision shall be substituted for the provision in section six, subsection (1), of The Finance Act, 1919:—
Provided that where the brewer is the occupier of a house of an annual value of twelve pounds or less, he may in any year obtain without payment of duty a licence to brew a quantity not exceeding four bushels of malt, or the equivalent thereof, for his own use.—[Mr. Pretymon.]

Brought up, and read the First time.

Mr. PRETYMAN: I beg to move. "That the Clause be read a Second time."
I hope the, Chancellor of the Exchequer may regard this suggestion favourably. The point is that in the agricultural districts—particularly in East Anglia—agricultural labourers have been in the habit. of brewing a small quantity of home-brewed beer. Their right to do so is at present restricted to a certain season of the year, and they may brew only from two bushels of malt. Their present position is rather unfortunate, because through the fall in the price of barley they have had to submit to a reduction of wages. The price of barley in the past year has fallen from 72s. to 44s., and that has been a powerful factor in the decline of the agricultural labourers wages, and although the price of barley has thus fallen, there has been no redueion in the price of the beer which they buy at the public-houses. Therefore I hope the Chancellor of the Exchequer may sec his way to make this small concession, the cost of which would be quite negligible, although the concession itself would he very highly appreciated in the rural areas, especially in East Anglia. We ask that the assessable value of the occupier's house should be raised to £12, and that the brewing should be allowed at any time of the year.

Sir R. HORNE: I will accept the Clause if my right hon. Friend will agree to substitute £8 for £12 as the assessable value of the house.

Mr. PRETYMAN: If the right hon. Gentleman cannot go beyond £8, although in late years assessments have been raised considerably, I will gratefully accept that concession, and thank them very much for it.

Lieut.-Commander KENWORTHY: Before we decide this matter I should like
some information in regard to it. Do the labourers make anything out of it? I should have thought there are very few householders who do not pay more than £8 a year. How much is the Chancellor of the Exchequer going to lose by this? I understand that in the United States every householder now runs his own private still or vat. If this concession be granted, shall we not have householders wanting to distil spirits as well as brew beer without paying any duty? I cannot see the justice of this. Because the right hon. Gentleman has a number of agricultural voters in his constituency, who are in the habit of brewing their own beer, I do not see why they should he granted this privilege. What about the poor fellows unemployed in our towns who are paying through the nose for their beer?

Sir R. HORNE: Surely the hon. and gallant Member understands that this is not a new thing. It is only the amount of malt which is allowed to be used that is altered.

Lieut.-Commander KENWORTHY: That may be so, but who knows what will come next? The right hon. Gentleman next year, if he is successful now, may come along with another demand to double the quantity of malt to be brewed from.

Major MORRISON-BELL: I hope the Chancellor of the Exchequer will also agree to a small reduction in the taxation on cider, which would be greatly to the advantages of the agricultural labourers in the West Country.

Lieut.-Commander KENWORTHY: What is this concession going to cost? We are entitled to be told that.

Captain WEDGWOOD BENN: Yes, I want to ask that as well. It is a perfectly legitimate question. The Chancellor of the Exchequer appears always to have something in his pocket for certain applicants for relief, and what will this particular application cost the revenue?

Sir R. HORNE: I really cannot say, but my hon. and gallant Friend may take it that the cost will be infinitesimal.

Question, "That the Clause be read a Second time," put, and agreed to.

Clause read a Second time.

Amendment made: Leave out the word "twelve" ["twelve pounds or less"], and insert instead thereof the word "eight."—[Mr. Pretyman.]

Clause, as amended, added to the Bill.

NEW CLAUSE.—(Exemption from entertainment duty.)

Where the entertainment is provided by a society which is established solely for the purpose of promoting the interests of agriculture, or some branch thereof, and which is not conducted for profit, the fact that a band is provided as an accompaniment to such show shall not disqualify the society from claiming a certificate of exemption from entertainment duty in respect of such entertainment.—[Mr. Turton.]

Brought up, and read the First time.

Mr. TURTON: I beg to move, "That the Clause be read a Second time."
This is a very small Amendment, and I am almost tempted to apologise for bringing it forward. As hon. Members are well aware, agricultural shows are very properly exempted from payment of the Entertainments Tax, but it seems that if the village band is brought on the scene at a small agricultural show, at once that extortionate person the Customs officer claims payment of the tax. The question was raised on the Budget last year, and although we got a very unsympathetic reply from the Chancellor of the Exchequer, we secured a very good Division. As on this occasion I hope for still more support, I propose to press this new Clause to a Division. I ask the Chancellor of the Exchequer how he can reconcile it with his conscience that he is so entirely in favour of assisting us in the poor agricultural districts and when we get up for the purpose of advancing agriculture and for the good of the agricultural community a small show in a village, because the village band comes to play without any charge whatever, he swoops down and claims entertainment duty? That is an injustice which I hope the Committee will not fail to remedy, even to the extent of defeating the Government on an Amendment of such substance as this.

Sir R. HORNE: It goes both to my heart and conscience to refuse the request, but the truth is that if you once begin to make this kind of exception—

Mr. TURTON: No it. stands by itself.

Sir R. HORNE: Everything will follow upon it although it stands by itself. It will extend to everything else, and it will be impossible to draw a line of demarcation between one form and another, between whether a band is to play and whether it is not, and in the case where the band is the chief feature and where many people desire to see some trade show. We have to exclude all these shows. If we begin with agricultural shows it will extend to everything else until the whole Entertainments Duty wilt be wrecked. I hope the hon. Member will take my assurance that I would not resist it but for the fact that though it seems a small thing it will become in the end one of great gravity. I cannot accept the proposal.

Mr. ROYCE: I hope the hon. Member will press this to a division. This is a subject which really affects not the entertainment of the people but largely the condition of agriculture.

Sir R. HORNE: It does not require a band.

Mr. ROYCE: If the right hon. Gentleman heard some of the bands in my part of the country he would not regard it as an entertainment. This is not a question of merriment but a real substance. The amount the Chancellor can possibly hope to receive from shows of this description is so small that it is not worth considering in comparison with the amount of benefit agriculture receives from competitive shows. Agriculture has no relation to any other form of show of this description. It is something quite separate and distinct and I hope the right hon. Gentleman will not prevent these shows, many of them purely local, in villages where the funds are used exclusively for prizes in connection with shows and in addition they are largely supported by contributions from outside. I hope the right hon. Gentleman even now will see his way to make an exception in the case of agricultural shows.

Question put, "That the Clause be read a second time."

The Committee divided: Ayes, 49; Noes, 131.

Division No. 188.]
AYES.
[12.20 a.m.


Banton, George
Hinds, John
Perkins, Waiter Frank


Barker, Major Robert H.
Holbrook, Sir Arthur Richard
Rendall, Athelstan


Barton, Sir William (Oldham)
Hopkins, John W. W.
Richardson, R. (Houghton-le-Spring)


Bell, Lieut.-Col. W. C. H. (Devizes)
Hunter, General Sir A. (Lancaster)
Rose, Frank H.


Bowerman, Rt. Hon. Charles W.
John, William (Rhondda, West)
Royds, Lieut.-Colonel Edmund


Bromfield, William
Jones, Morgan (Caerphilly)
Swan, J. E.


Bruton, Sir James
Kenworthy, Lieut.-Commander J. M.
Thomson, T. (Middlesbrough, West)


Carter, W. (Nottingham, Mansfield)
Kiley, James Daniel
Thorne, G. R. (Wolverhampton, E.)


Cope, Major William
Lane-Fox, G. R.
Walsh, Stephen (Lancaster, Ince)


Courthope, Lieut.-Col. George L.
Lawson, John James
Watts-Morgan, Lieut.-Col. D.


Davies, Thomas (Cirencester)
Lort-Williams, J.
Williams, Penry (Middlesbrough, E.)


Davison, Sir W. H. (Kensington, S.)
Lyle-Samuel, Alexander
Wills, Lt.-Col. Sir Gilbert Alan H.


Edwards, C. (Monmouth, Bedwellty)
McLaren, Hon. H. D. (Leicester)
Windsor, Viscount


Entwistle, Major C. F.
Morrison-Bell, Major A. C.
Weimer, Viscount


Foot, Isaac
Myers, Thomas



Gritten, W. G. Howard
Newbould, Alfred Ernest
TELLERS FOR THE AYES.—


Harmsworth, Hon. E. C. (Kent)
Pennefather, De Fonblanque
Mr. Tartan and Mr. Royce.


Hayday, Arthur






NOES.


Agg-Gardner, Sir James Tynte
Green, Joseph F. (Leicester, W.)
Rae, Sir Henry N.


Amery, Rt. Hon. Leopold C. M. S.
Greene, Lt.-Col. Sir W. (Hack'y, N.,
Raw, Lieutenant-Colonel Dr. N.


Armitage, Robert
Greenwood, Rt. Hon. Sir Hamar
Remer, J. R.


Armstrong, Henry Bruce
Greenwood, William (Stockport)
Richardson, Lt.-Col. Sir P. (Chertsey)


Baird, Sir John Lawrence
Gretton, Colonel John
Roberts, Rt. Hon. G. H. (Norwich)


Baldwin, Rt. Hon. Stanley
Guest, Capt. Rt. Hon. Frederick E
Robinson, S. (Brecon and Radnor)


Barlow, Sir Montague
Hacking, Captain Douglas H.
Roundell, Colonel R. F.


Barnston, Major Harry
Hannon, Patrick Joseph Henry
Sanders, Colonel Sir Robert Arthur


Bigland, Alfred
Harmsworth, C. B. (Bedford, Luton)
Sassoon, Sir Phillip Albert Gustave D.


Birchall, J. Dearman
Henderson, Lt.-Col. V. L. (Tradeston)
Scott, A. M. (Glasgow, Bridgeton)


Borwick, Major G. O.
Herbert, Dennis (Hertford, Watford)
Scott, Sir Leslie (Liverp'l, Exchange)


Boscawen, Rt. Hon. Sir A. Griffith-
Holmes, J. Stanley
Seddon, J. A.


Bowyer, Captain G. W. E.
Hood, Sir Joseph
Seely, Major-General Rt. Hon. John


Breese, Major Charles E.
Horne, Sir R. S. (Glasgow, Hillhead)
Shaw, Hon. Alex. (Kilmarnock)


Bridgeman, Rt. Hon. William Clive
Inskip, Thomas Walker H.
Shortt, Rt. Hon. E. (N'castle-on-T.)


Broad, Thomas Tucker
Johnstone, Joseph
Smith, Sir Allan M. (Croydon, South)


Buckley, Lieut.-Colonel A.
Jones, J. T. (Carmarthen, Llanelly)
Smith, Sir Harold (Warrington)


Burdon, Colonel Rowland
Kellaway, Rt. Hon. Fredk. George
Stanley, Major Hon. G. (Preston)


Campion, Lieut.-Colonel W. R.
Kidd, James
Stanton, Charles Butt


Carr, W. Theodore
King, Captain Henry Douglas
Steel, Major S. Strang


Cecil. Rt. Hon, Sir Evelyn (Aston)
Lewis, T. A. (Glam., Pontypridd)
Sturrock, J. Leng


Chamberlain, N. (Birm., Ladywood)
Lindsay, William Arthur
Sugden, W. H.


Churchill, Rt. Hon. Winston S.
Mackinder, Sir H. J. (Camlachie)
Sutherland, Sir William


Clay, Lieut.-Colonel H. H. Spender
McLaren, Robert (Lanark, Northern)
Thomson, F. C. (Aberdeen, South)


Coats, Sir Stuart
Manville, Edward
Thomson, Sir W. Mitcheil- (Maryhill)


Colvin, Brig.-General Richard Beale
Mason, Robert
Tryon, Major George Clement


Davidson, J. C. C. (Hemel Hempstead)
Mond, Rt. Hon. Sir Alfred Moritz
Wallace, J.


Davidson, Major-General Sir J. H.
Montagu, Rt. Hon. E. S.
Walters, Rt. Hon. Sir John Tudor


Davies, David (Montgomery)
Moore-Brabazon, Lieut.-Col. J. T. C
Ward, William Dudley (Soughampton)


Doyle, N. Grattan
Morden, Col. W. Grant
Ward-Jackson, Major C. L.


Ednam, Viscount
Moreing, Captain Algernon H.
Waring, Major Walter


Edwards, Major J. (Aberavon)
Morrison, Hugh
Watson, Captain John Bertrand


Edwards. Hugh (Glam., Neath)
Munro, Rt. Hon. Robert
White, Col. G. D. (Southport)


Evans, Ernest
Murchison, C. K.
Williams, C. (Tavistock)


Eyres-Monsell, Cont. Bolton M.
Murray, Rt. Hon. C. D (Edinburgh)
Wilson, Rt. Hon. J. W. (Stourbridge)


Falle, Major Sir Bertram Godfray
Murray, John (Leeds, West)
Wise, Frederick


Fisher, Rt. Hon. Herbert A. L.
Nail, Major Joseph
Wood, Hon. Edward F. L. (Ripon)


FitzRoy, Captain Hon. Edward A.
Neal, Arthur
Wood, Sir H. K. (Woolwich, West)


Foxcroft, Captain Charles Talbot
Newman, Sir R. H. S. D. L. (Exeter)
Wood, Major Sir S. Hill-(High Peak)


Fraser, Major Sir Keith
Nicholson, Reginald (Doncaster)
Young, Sir Frederick W. (Swindon)


Ganzoni, Sir John
Parry, Lieut.-Colonel Thomas Henry
Younger, Sir George


George, Rt. Hon. David Lloyd
Pease, Rt. Hon. Herbert Pike



Gibbs. Colonel George Abraham
Percy, Lord Eustace (Hastings)
TELLERS FOR THE NOES.—


Gilmour, Lieut.-Colonel Sir John
Pollock. Rt. Hon. Sir Ernest Murray
Colonel Leslie Wilson and Mr. McCurdy.


Goff, Sir R. Park
Pretyman, Rt. Hon. Ernest G.

NEW CLAUSE.—(Repeal of duties on table waters.)

Sections four, five and six of the Finance (New Duties) Act, 1916, and Section eleven of the Finance Act, 1916, are hereby repealed.—[Sir Hatford Mackinder.]

Brought up, and read the First time.

Sir H. MACKINDER: I beg to move, "That the Clause be read a Second time."
I have a very simple case to make. My point is that the Mineral Water Duties if
completely repealed would yield a revenue to the Exchequer. I believe that at the present time they are yielding no net revenue to the State, or that they are very nearly reaching that point. The duties are fourpence a gallon in the case of sweetened mineral waters and eight-pence in the case of unsweetened: that is practically in the case of soda water. By far the more important of the two are the sweetened, because if we take the quantities on which duty was paid last year, we find that 45,000,000
gallons of sweetened mineral waters paid duty, whereas only 12,000,000 gallons of unsweetened paid. That being the case, we find this very simple equation. The duty yielded last year by the sweetened waters amounted to about £750,000. In addition to that there was paid on these sweetened waters, I am informed, about £500,000 duty on sugar, and about £250,000 duty on the alcohol in the essences which were used to flavour them. We thus get about £750,000 as the indirect taxation paid by sweetened mineral waters, and £750,000 as the direct taxation in the shape of the fourpenny duty. It follows from that that if you double the present sale you would get as much from the indirect taxation as you get to-day from the indirect and the direct put together.
What is the position as regards the quantities that are being drunk? Since the duties were imposed in 1916 there has been a falling off in quantity of 75 per cent., and that 75 per cent. cannot be ascribed to the present depression in the purchasing powers of the mass of the people, because if I take the decreases that have taken place in the last three years they amount in round figures to this sort of thing. For the year 1919 there was a falling off of nearly 10,000,000 gallons. In the year 1920 there was an additional falling off of nearly 10.000,000 gallons, and in the year 1921 there was a falling off of nearly 3,000,000 more. The result is that you have had over 22,000,000 gallons fall in the consumption of sweetened mineral waters in the last three years, and that includes the time of boom, and the fall was more rapid in the time of boom than in the year of depression. I understand that at the present time the figures show that the diminution is still continuing. There is a very considerable case to be made for the view that if you take your direct duty off, and you thereby permit a reduction in the price charged, you would according to the ordinary results of cheapening a commodity, increase the consumption, and the yield from indirect taxation on sugar and the alcohol in the essences would compensate you for the loss of your direct taxation. That is the simple case in regard to the matter. But then you have to consider the cost of collection. You have to consider the fact that there are about 3,000 manufacturers of mineral
waters in this country with a capital which I am assured runs to about £30,000,000, and that in the time before 1916 they used to pay something like £7,000,000 a year in wages. I am assured now that the number of employees of these manufacturers has fallen by one half, from 30,000 to 15,000. We have to add to the loss to the Exchequer the unemployment dole and the loss of Income Tax which you would have got. In addition you have to consider the other trades which are involved in this matter. There are the makers of boxes and bottles, and the makers of machinery that is required to fill the bottles. All of these industries are employing fewer people, returning a smaller profit and yielding less income to the State. I feel that a very fair case may be made out for the statement that these mineral water duties at the present time are actually a losing concern to the Exchequer, and that their repeal would lead to an appreciable profit if not in the first year at any rate in the second year.

Mr. LYLE-SAMUEL: The hon. Member is in favour of taxing bottles but not their contents.

Sir H. MACKINDER: One thing at a time. If I am in favour of taxing bottles I am asking for what will increase the bottle making industry and therefore will make the taxes yield more.
There is the case of course of the soda water. There you have no compensation in the shape of increased yield in indirect taxation. But the soda water portion of the industry is a relatively unimportant one. The consumption is only 12,000.000 gallons against 45,000,000 gallons. I have put the Clause in such a form as to abolish that duty because it seemed to me that probably the Chancellor of the Exchequer, if he made a concession, would wish to make a clean sweep of a. losing concern. But I rest my case mainly on the case of the sweetened waters which, I believe, is a. sufficiently strong one to carry all that is involved on the other side. I appeal to the Solicitor-General to face that case and to say whether he does not think that we might profitably remit the tax which is causing a great deal of trouble to the manufacturers. There is also the point that at the present time you have a very large system of evasion of this tax going on. You have the shops with soda water fountains. Those soda water
fountains are bought at considerable cost. I believe they run to about £150.
I have asked questions several times of the Treasury in regard to the yield of this tax in the case of shops selling from these soda water fountains, and I am assured that though no separate statistics are kept, every effort is made to see that there no evasion is resorted to. I have not been able to ascertain what these means are, but there is considerable suspicion at any rate in the City of Glasgow, where I have had this matter investigated, that there is very large evasion going on. I suggest that that is bad for the morals of the community. These machines are mostly of foreign make, and do not give employment to people in this country. They may yield something in duty, but they do not give employment in this country.

Mr. LINDSAY: I only want to put a question to my right hon. and learned Friend in regard to this evasion by manufacturers. I have communicated with the Chancellor of the Exchequer on the matter, without satisfactory result. I will give my own experience. I had a machine for making soda water and in about six months time I found that I had saved £9 in duty. The machine was a very simple household one and, if it had been a large one, the amount of duty saved would have been far greater.

Mr. LYLE-SAMUEL: How much soda water was there?

Mr. LINDSAY: I cannot exactly tell at the moment. When I approached the Chancellor on the matter he said that the machine was not used for selling the soda. Then I wrote to him and asked if the logical conclusion was that it would be right for me to have a private still if I promised not to sell the whisky. He seemed to regard the letter as of a frivolous character, because he did not reply to it. I should not be allowed to save taxation as I now legally can at 8d. a gallon. The Chancellor should do either one of two things; either take the duty off altogether, or see that those who manufactured the water were taxed. I submit that the logical conclusion is either tax them all or abolish the duty.

Sir L. SCOTT: I regret that the Chancellor of the Exchequer does not see his way to accede to this Amendment.
In the first place, the Amendment would cost £1,150,000 in the full year [HON. MEMBERS: "No."] Secondly, I should like to make one or two observations on the speech of the hon. Member for Camlachie (Sir H. Mackinder.) He delivered a most interesting speech, the foundation of which I desire however to criticise. The speech followed a perfectly logical sequence right through and was extremely interesting. The whole basis of his case was that if you look at the statistics of this trade you find that this unfortunate trade has suffered a series of vicissitudes from 1916 onwards. I think it is not only not true but not at all true to say so. Look at the statistics. I have the figures here. The duty was imposed in 1916 in regard to sweetened table waters. The consumption from the 1st May, 1916 to 1917—that is to say a little less than the full fiscal year—was 46 million gallons. The result of imposing the duty was not to make the sales go down, for they rose by 10 millions to 56 millions the next year, and they rose another S millions to 64 millions the year after. Then the War being over in 1919—

Sir H. MACKINDER: Less consumption?

Sir L. SCOTT: —it fell to 56 millions, and in 1921 to 45 millions, and this year it is estimated to 41 millions. During the same series of years unsweetened rose practically steadily from 10 millions in 1917 to 13 millions for this year. No doubt in 1918 the sales of mineral waters in the sweetened were encouraged arid artificially fomented by the restriction on the sale of beer which we all remember. If you look into the figures you find various reasons of that kind, but so far as we are able to judge from the statistics, it is impossible to say that the duty has had any definite effect in any one year. Of course, we all know that the economic change must necessarily have some economic result. All we can say is that you cannot build upon that any argument at all. The difficulties literally, no doubt, are due to trade depression. They are not now selling the penny bottles to school children which they used to buy to a great extent and which very largely increased their turnover. The truth of the matter is that, though it is not an extreme luxury—it is a mistake to call it a luxury—it is not an absolutely indis-
pensable necessity. Drinks such as ginger-beer and lemonade are a fair subject for a tax for a Chancellor in extremis, and, after all, there has been a claim from the trade in alcoholic drinks for a great number of years that something should be put on the people who did not drink beer and spirits. There is a great deal to be said for the complaint from a purely fiscal point of view. The Chancellor of the Exchequer is obliged to consider these things from the point of view of raising revenue, and no other point of view. To take off this tax now would not only cost considerably more than a million in the full year, but produce an inequality of treatment against which a very large section of the community somewhat seriously complain. The only other point is that last year there was a Motion to abolish the duties. It was not even moved. There was an Amendment to reduce the duty by half, but it was considered in the House and rejected. The House considered and disposed of it, so I ask the Committee to take the same view now.

Mr. LINDSAY: Before the right hon. Gentleman finishes will he reply to my point?

Sir L. SCOTT: I have no doubt that if the hon. Member communicates with the Chancellor of the Exchequer he will be glad to receive his representations. Speaking upon the final point of view, I do not think that the evasion on soda-water fountains amounts to very much.

Mr. LYLE-SAMUEL: I should like to ask the Solicitor-General whether or not the Member for Cromac (Mr. Lindsay) has a right to establish a private soda-water still, thereby depriving the Revenue; and, secondly, whether or not the Solicitor-General wishes us to understand that this tax is now to be regarded in the nature of a permanent tax?

Sir L. SCOTT: I gave no indication of that.

Mr. LYLE-SAMUEL: May I put it down to my mis-apprehension of his remarks? I am only referring to his argument that there was heavy taxation upon all alcoholic liquors and that the basis of taxation was broad and fair. Therefore this tax was to be defended on
that ground. Now we have a fairer distribution. both in regard to those who indulge in mineral waters, whether to be used with or without the accompaniment of some of those others the hon. Member for Cromac (Mr. Lindsay) associated with so large a consumption of innocent, bubbling water.

Mr. LINDSAY: May I ask by what right the hon. Gentleman says that? I said nothing about taking anything with the soda.

Mr. LYLE-SAMUEL: If the hon. Gentleman is going to consume that vast quantity of aerated water without anything to support or justify so large a consumption, we shall hold him in even less regard than we do at present, and we shall even wonder at him and be amazed.

Mr. STURROCK: It is your dry speeches.

Mr. LYLE-SAMUEL: My hon. Friend sits for a constituency in a part of Great Britain which is more responsible for the consumption of non-alcoholic liquor in the way of soda water than any other part of the country, and I am not surprised that he is rather bubbling over and ebullient in his observations. But his observations are really as irrelevant as if we were discussing the particular form of liquor which his constituency is associated with.
I would press the Solicitor-General to give us an assurance on this point. It is not fair that the mineral water trade of the country should bear this burden. It is something new in our fiscal system. We regard the consumption of alcoholic liquors as in the nature of a luxury. When one considers the social habits of the mass of the people it cannot be said that the consumption of mineral water is in the nature of a luxury. This is a tax which bears hardly on the mass of the people—those least able to bear the burden. Therefore I shall oppose the continuance of this tax.
In reference to the speech of my hon. Friend the Member for Camlachie (Sir H Mackinder), according to the Solicitor-General he is the first Member of the House who has had the courage to press this claim. I am oddly amused that he, who is opposing the increased cost of
these non-alcoholic drinks, should be supporting the increased cost of the bottles which contain these innocuous drinks. [HON. MEMBERS: "Order!"] I am perfectly in order. I have never known a Chairman who so strictly determines that every Member shall keep in order as does our present Chairman. The Chairman has called me to order on occasions when I felt it to be rather painful, because I thought I was in order. Whenever the Chairman calls me to order I shall immediately obey, but I shall wait till he does so. I think I am entitled to say that my hon. Friend who moves this Clause is one of those who is supporting taxation under the purely farcical and absurd nomenclature of the safeguarding of industries.

The CHAIRMAN: I think I gathered that the hon. Member was anticipating that he would be out of Order.

Mr. LYLE-SAMUEL: I am sorry to have confirmed your premonition. I hoped I was in order in showing that, if my hon. Friend is to be interpreted rightly by this Committee, he wants these nonalcoholic liquors to be sold more cheaply by the removal of this tax, and therefore that it is not appropriate that he should

take a course which necessitates that they are sold more dearly.

Sir H. MACKINDER: Although I do not feel that the learned Solicitor-General has in the least met the case, I recognise that at this time of night it is not practical to go into statistics and meet his points in detail, and also that I can hardly ask the House to divide on this question. There is no good in having Divisions which are futile, and this would be a futile Division. I do ask the Solicitor-General to put it to the Chancellor of the Exchequer that between now and the next Budget this matter should be very carefully considered from the point of view of these duties not being a business proposition. I do not believe they are. Further, in spite of all he has said, I really do not think he has realised the magnitude of the evasion. There is a great evasion going on in shops, and if we could have some proper method of dealing with it in order to bring this matter to the test we should be grateful. I ask leave to withdraw the Motion.

HON. MEMBERS: No.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 21; Noes, 149.

Division No. 189.]
AYES.
[1.0 a.m.


Bowerman, Rt. Hon. Charles W.
Lindsay, William Arthur
Thomson, T. (Middlesbrough, West)


Edwards, C. (Monmouth, Bedwellty)
Lyle-Samuel, Alexander
Walsh, Stephen (Lancaster, Ince)


Entwistle, Major C. F.
Newbould, Alfred Ernest
Watts-Morgan. Lieut.-Col. D.


Hayday, Arthur
Rendall, Athelstan
Williams, Penry (Middlesbrough. E.)


Holmes, J. Stanley
Richardson, R. (Houghton-le-Spring)



John, William (Rhondda, West)
Rose, Frank H.
TELLERS FOR THE AYES.—


Jones, Morgan (Caerphilly)
Royce, William Stapleton
Lieut. Commander Kenworthy and Mr. Myers.


Kiley, James Daniel
Swan, J. E.



Lawson, John James




NOES.


Agg-Gardner, Sir James Tynte
Clay, Lieut.-Colonel H. H. Spender
Greene, Lt.-Col. Sir W. (Hack'y, N.)


Amery, Rt. Hon. Leopold C. M. S.
Coats, Sir Stuart
Greenwood, Rt. Hon. Sir Hamar


Armitage, Robert
Cope, Major William
Greenwood, William (Stockport)


Armstrong, Henry Bruce
Courthope, Lieut.-Col. George L.
Gretton, Colonel John


Baird, Sir John Lawrence
Davidson, J. C. C. (Hemel Hempstead)
Gritten, W. G. Howard


Barker, Major Robert H.
Davidson, Major-General Sir J. H.
Guest, Capt. Rt. Hon. Frederick E.


Barlow, Sir Montague
Davies, Thomas (Cirencester)
Hacking, Captain Douglas H.


Barnes, Major H. (Newcastle, E.)
Doyle, N. Grattan
Hannon, Patrick Joseph Henry


Barnston, Major Harry
Ednam, Viscount
Harmsworth, C. B. (Bedford, Luton)


Bell, Lieut.-Col. W. C. H. (Devizes)
Edwards, Major J. (Aberavon)
Harmsworth, Hon. E. C. (Kent)


Bigland, Alfred
Evans, Ernest
Henderson, Lt.-Col. V. L. (Tradeston)


Birchall, J. Dearman
Eyres-Monsell, Com. Bolton M.
Hennessy, Major J. R. G.


Borwick, Major G. O.
Falie, Major Sir Bertram Godfray
Herbert, Dennis (Hertford, Watford)


Boscawen, Rt. Hon. Sir A. Griffith-
Fisher, Rt. Hon. Herbert A. L.
Hinds, John


Bowyer. Captain G. W. E.
FitzRoy, Captain Hon. Edward A.
Holbrook, Sir Arthur Richard


Breese, Major Charles E.
Foot, Isaac
Hood, Sir Joseph


Bridgeman, Rt. Hon. William Clive
Foxcroft, Captain Charles Talbot
Hopkinson, A. (Lancaster, Mossley)


Broad, Thomas Tucker
France, Gerald Ashburner
Horne, Sir R. S. (Glasgow, Hillhead)


Brown, Brig.-Gen. Clifton (Newbury)
Fraser, Major Sir Keith
Hunter, General Sir A. (Lancaster)


Bruton, Sir James
Ganzoni, Sir John
Inskip, Thomas Walker H.


Buckley, Lieut.-Colonel A.
George, Rt. Hon. David Lloyd
Johnstone, Joseph


Burdon, Colonel Rowland
Gibbs, Colonel George Abraham
Jones, J. T. (Carmarthen, Llanelly)


Campion, Lieut.-Colonel W. R.
Gilmour, Lieut.-Colonel Sir John
Kellaway, Rt. Hon. Fredk. George


Carr, W. Theodore
Goff, Sir R. Park
Kidd, James


King, Captain Henry Douglas
Percy, Lord Eustace (Hastings)
Sugden, W. H.


Lane-Fox, G. R.
Perkins, Waiter Frank
Sutherland, Sir William


Lewis, T. A. (Glam., Pontypridd)
Pollock, Rt. Hon. Sir Ernest Murray
Thomson, F. C. (Aberdeen, South)


Lort-Williams, J.
Pretyman, Rt. Hon. Ernest G.
Thomson, Sir W. Mitchell- (Maryhill)


McLaren, Hon. H. D. (Leicester)
Rae, Sir Henry N.
Tryon, Major George Clement


McLaren, Robert (Lanark, Northern)
Raw, Lieutenant-Colonel Dr. N.
Turton, Edmund Russborough


Macquisten, F. A.
Remer, J. R.
Wallace, J.


Mallalieu, Frederick William
Richardson, Lt.-Col. Sir P. (Chertsey)
Walters, Rt. Hon. Sir John Tudor


Manville, Edward
Roberts, Rt. Hon. G. H. (Norwich)
Ward, William Dudley (Southampton)


Mason, Robert
Roberts, Samuel (Hereford, Hereford)
Ward-Jackson, Major C. L.


Mond, Rt. Hon. Sir Alfred Moritz
Robinson, S. (Brecon and Radnor)
Waring, Major Walter


Montagu, Rt. Hon. E. S.
Roundell, Colonel R. F.
Watson, Captain John Bertrand


Moore-Brabazon, Lieut.-Col. J. T. C.
Royds, Lieut.-Colonel Edmund
Wheler, Col. Granville C. H.


Morden, Col. W. Grant
Sanders, Colonel Sir Robert Arthur
White, Col. G. D. (Southport)


Moreing, Captain Algernon H.
Sassoon, Sir Philip Albert Gustave D.
Williams, C. (Tavistock)


Morrison, Hugh
Scott, A. M. (Glasgow, Bridgeton)
Wills, Lt.-Col. Sir Gilbert Alan H.


Morrison-Bell, Major A. C.
Scott, Sir Leslie (Liverp'l, Exchange)
Wilson, Rt. Hon. J. W. (Stourbridge)


Munro, Rt. Hon. Robert
Seddon, J. A.
Wise, Frederick


Murchison, C. K.
Seely, Major-General Rt. Hon. John
Wolmer, Viscount


Murray, Rt. Hon. C. D. (Edinburgh)
Shaw, Hon. Alex. (Kilmarnock)
Wood, Hon. Edward F. L. (Ripon)


Murray, John (Leeds, West)
Shortt, Rt. Hon. E. (N'castle-on-T.)
Wood, Sir H. K. (Woolwich, West)


Neal, Arthur
Smith, Sir Allan M. (Croydon, South)
Wood, Major Sir S. Hill-(High Peak)


Newman, Sir R. H. S. D. L. (Exeter)
Smith Sir Harold (Warrington)
Young, Sir Frederick W. (Swindon)


Nicholson, Reginald (Doncaster)
Stanley, Major Hon. G. (Preston)



Parry, Lieut.-Colonel Thomas Henry
Stanton, Charles Butt
TELLERS FOR THE NOES.—


Pease, Rt. Hon. Herbert Pike
Steel, Major S. Strang
Colonel Leslie Wilson and Mr. McCurdy.


Pennefather, De Fonblanque
Sturrock, J. Leng

NEW CLAUSE.—(Amendment of 9 and 10 Geo. V, c. 32, s. 30.)

Section thirty of The Finance Act, 1919, is hereby repealed so far—as it affects interest—accruing due after the commencement of this Act.—[Lieut.-Colonel Royds.]

Brought up, and read the First time.

Lieut.-Colonel ROYDS: I beg to move, "That the Clause be read a Second time."
Eight years are allowed by law now for the payment of Estate Duty in respect of land, and the rate of interest by the Finance Act, 1919, was raised from 3 per cent, to 4 per cent. You are not entitled to deduct Income Tax, and it has to be added to the 4 per cent. interest which you pay now on the arrears a Estate Duty, which is equivalent to being at, the rate of £5 6s. 8d. per cent. This was much too high, having regard to the present value of money. The object of this Amendment is to repeal the Section of the 1919 Act to reduce the rate of interest again to 3 per cent. which, I think, is a fair rate. I know I shall be met by the statement that the Government cannot concede the point, because they have only just agreed to charge 4½ per cent. in respect of arrears of Excess Profits Duty. The two cases are not analogous because in the case of Excess Profits Duty that is a concession made. It was never intended that that should be an arrear but a concession. The case of Estate Duty is a statute by law, and was fixed at 3 per cent. It is now owing to the Income Tax not allowed to be deducted £5 6s. 8d. I
hope the Government understanding the position will be prepared to concede the point I ask.

Sir L. SCOTT: We cannot accept this Clause. The rate was, as the Mover mentioned, raised from 3 per cent., not to 4 per cent. in 1919. I submit to the Committee that it ought to stay there. It is essential, where the Government is allowing money to stand out which eventually is to be paid to the Government., whether voluntarily or under Statute, that there should be no inducement to the debtor to postpone payment in order to get the use of the money when it is wanted by the State, If you charge a low rate of interest, you necessarily give him an inducement. The only thing to do is to charge interest rather higher than the market rate. A rate of 5⅓ per cent. is by no means an undue rate of interest for the purpose.

Mr. LYLE-SAMUEL: Did the hon. and gallant Gentleman say 5⅓ per cent?

Sir L. SCOTT: Yes.

Question, "That the Clause be read a Second time," put, and negatived.

A new Clause (Option as to payment of estate duty in. certain eases) stood on the Order Paper in the name of Mr. Ormsby-Gore.

Mr. LANE-FOX: On behalf of my hon. Friend the Member for Stafford (Mr. Ormsby-Gore) I desire to move—

The CHAIRMAN: That is impossible until the end of the new Clauses. If
Members whose names are against any particular Clause are not present, it cannot be moved.

NEW CLAUSE.—(Payment of Super-tax by instalments.)

The provisions of Sub-section (1) and of paragraphs (a) and (c) of Sub-section (2) of Section one hundred and fifty-seven of the Income Tax Act, 1918 (which relates to the (late when the payment of Income Tax shall become due, and provides for the payment of Income Tax by instalments in certain cases) shall apply to the case of Super-tax charged under Part II of the Income Tax Act, 1918, as they apply to the cases mentioned in paragraph (b) of Sub-section (2) of that Section, and the provisions of the income Tax Act, 1918, applied for the purposes of the collection and recovery of Supertax by Sub-section (6) of Section seven of that Act shall be read and construed with the necessary modifications accordingly.—[Mr. Lane-Fox.]

Brought up, and read the First time.

Mr. LANE-FOX: I beg to move, "That the Clause be read a Second time."
I desire to make the arrangements for the payment of Super-tax the same as in the case of Income Tax. It is obvious that in these days the Government are having difficulty in collecting Super-tax at all. A system of payment by instalments would be far better, because owing to the present high rate it is impossible to pay it in one instalment.

Sir L. SCOTT: Again I regret to say it is impossible to accept this Amendment. To accept it would mean a loss of £14,000,000 out of this year's revenue. The proposal is to change the date of payment from 1st January, which falls within the year, and substitute for that one-half payment on that date and a half payment in the following July, three months after the end of the financial year. That would mean a postponement of payment and a loss to the revenue of £14,000,000 in the financial year for which the Chancellor has budgeted.

Mr. LYLE-SAMUEL: Of my own knowledge private individuals have found with reference to the payment of Super-tax and indeed in reference to Income Tax that the representatives of the Treasury have been most considerate. I would like to know whether the uncompromising "No" of the Solicitor-General means that there is to be no relaxation in the coming year of that
consideration which has been shown but that the broad spirit with which the matter has been dealt with will be continued and that there is to be no harsh treatment of individuals.

Sir L. SCOTT: I merely meant what I said. The present practice will be continued.

Question, "That the Clause be read a. Second time," put, and negatived.

NEW CLAUSE.—(Amendment as to moneys payable under policies of life insurance effected for purposes of estate duty.)

If any person makes an insurance on his life or on the life of any other person with any insurance company legally established in the United Kingdom or in any British possessions or lawfully carrying on business in the United Kingdom and the policy of insurance expressly states that such insurance is made with the primary object of providing for estate duty which may become payable on the death of the assured and that so much as the holder of such policy or his legal personal representatives may direct of the capital stun payable thereunder will, on the death of the assured, be payable by the insurance company direct to the Commissioners of Inland Revenue for the purpose of being applied in or towards the payment of such estate duty, then, to the extent to which such capital sum is so paid and applied the same shall not for the purposes of death duties he deemed to be property passing on the death of the assured.—[Mr. Lane-Fox.]

Brought up, and read the First time.

Mr. LANE-FOX: I beg to move, "That the Clause be read a Second time."
This Clause was moved last year and I hope that now more favourable consideration will be given to it. When Death Duties were first instituted it was suggested that persons should insure their lives for the purpose of leaving their property less severely taxed.

Mr. LYLE-SAMUEL: Will my hon. Friend speak a little louder?

Mr. LANE-FOX: A great many individuals have insured their lives under the encouragement of the Government, and the effect of that is that higher duties have to be paid. In view of the constant encouragement given in favour of this insurance it is very unfair that the rate of taxation should thereby be increased.

Sir L. SCOTT: Again I regret that the Government cannot accept this Amendment. The hon. Member who moved the
Clause said that hopes were held out in 1894 that, if the risk was insured, some compensation by way of relaxation in favour of those who insured might be looked for in the future. I think that is an incorrect version of what took place at the time. I have before me a note of what Sir William Harcourt said when introducing his proposals. He said such a proposal was not practicable. The matter came up again in the spring of 1916, when the present Prime Minister was Chancellor of the Exchequer, and he pointed out that in order to carry it out it would be essential to ear-mark the proceeds of the policy for the payment of Death Duties, and he explained that to do so would mean that the amount received under the insurance policy would be exempt altogether from Death Duties. That is the real difficulty. If you do not exempt the policy moneys from Death Duties then they are on the same footing as any other investment. One man may like to save by means of insurance, and another by investments of a different kind. Why should one kind of investment be exempt from Death Duties and not another kind of investment? If it be suggested that the policy moneys, which of course are part of the estate which passes at death, are to be treated as not being a part of the estate, then it is giving a very large exemption from Death Duties to one particular form of investment. These are the broad reasons why the proposal has never been capable of adoption, although primâ facie there is a good deal to say in its favour. The loss if the proposal were adopted would be over £3,500,000.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Reduction of licence duty on certain liquor licences.)

The duties chargeable on the following excise liquor licences, that is to say, retailers' on-licences for spirits, beer, or wine, retailers' off-licenees for spirits, beer, or wine, shall be reduced by fifty per tentum.—[Colonel Sir A. Holbrook.]

Brought up, and read the First time.

Colonel Sir A. HOLBROOK: I beg to move, "That the Clause be read a Second time."
This Clause, I hope, will meet with the sympathy of the Chancellor of the Ex-
chequer, because it affects mainly a very large number of men who cannot he in any way regarded as profiteers—ex-service men who on retiring from the navy or the army have invested their all in a small public-house or beer-house. The character of these men as a rule is beyond question, because before they take these houses they have to pass an investigation of character by the brewers and the police, and, except in the case of Carlisle which is under the control of the Government, they have to go before the magistrates and get the permission of the justices before they can take over their licences. They are deserving of sympathy in all respects. The present rates of these duties were imposed by the Finance (1909–10) Act, 1910, at a time when retail licensed houses were entitled to remain open for periods varying according to the locality from 19½ to 17 hours on weekdays. Under the operation of the Licensing Act, 1921, the corresponding hours vary from 9 to 8 hours. The hours on Sundays have been reduced in similar proportions. The principle has always been accepted by the Legislature that licence duties should he imposed with reference to the number of hours during which liquor could be sold under the licenses. For instance, the Licensing Act, 1872, provided that for a licence under which liquor could not be sold on a Sunday the duty should be reduced by one-seventh. Again, the Licensing Act, 1874, made a similar provision with regard to early closing licences under which the sale of liquor had to cease one hour earlier than in ordinary circumstances. Finally, the Finance Act (No. 2), 1914, granted a rebate of licence duty in respect of those houses where hours of sale were curtailed by the orders of the Central Control Board and this was gradually increased until it reached 75 per cent. of the full duty. On this principle which is obviously fair, seeing that the present permitted hours of sale are about one-half of those in force when the present heavy rates of duty were imposed, the claim that these duties should be reduced by a similar proportion seems unanswerable. The provisions of the Licensing Act, 1921, having reduced the hours of trading, equity demands that a revision of the license duty charge should he considered by the Chancellor of the Exchequer, and the principle of the Finance Act, 1917, Section 7, given effect
to in the form of a reduction of charge, instead of, as then, a rebate where hours had been reduced, and I therefore ask for reduction as a quid pro quo for lessened trade as the outcome of over 50 per cent. less trading hours. I would point out that in present circumstances, owing to the houses being closed for the greater part of the day, the holders of licences for wayside inns situate in the Division which I represent lose much of the travelling trade which they held under the old system, and have to depend therefore on the village trade alone. If the Chancellor cannot see his way to making a 50 per cent. reduction of present license fees, I hope that at any rate he will display the same sympathy as he has done to clubs, and grant a very deserving class of men some relief from their present burdens.

Sir R. HORNE: I am afraid I cannot agree with the proposals made by my hon. and gallant Friend.

Sir A. HOLBROOK: If you cannot give me the whole reduction, can you not not give me 25 per cent.?

Sir R. HORNE: I am afraid I cannot. The proposal which the hon. and gallant Gentleman has made would cost the Exchequer over £1,750,000, so that I am afraid it is impossible in the situation to-day. May I just say one word on the view that the restricted hours should involve compensation in respect that it is not as easy to make a living. In point of fact, the reduction in the hours does not really operate to any appreciable extent. It is true of this as of every other trade. It is suffering from the diminution of the earnings of the people, and therefore of their spending power, and the result is that not so much is being spent on liquor than was the case a year ago. But I think it is true that the public have accommodated themselves to the new hours, and that there is no real reduction due to the lessened hours, but due to the depreciation of trade from which we are suffering. When we recover from the trade depression the question of the restricted hours will no doubt get attention.

Mr. REMER: There is one issue I want to bring to the notice of my right hon. Friend. He has given a concession to the clubs earlier in the Debate, and there is a great deal of dissatisfaction among licensed victuallers upon the competition
of these clubs, and I should like the Chancellor to consider carefully that injustice and to reconsider his decision in the light of the facts.

Sir R. HORNE: Whereas in the same period the increase in the levy upon clubs has been from £6 to £34, the increase in licence duty on public houses was only from £35 to 237, so that while the duty was increased almost six times in the case of the one the increase in the case of the other was infinitesimal.

Captain BOWYER: There are many public houses who are hard hit by the restrictions. Perhaps the Chancellor will remember the great canals throughout the country, and that many of the public houses on the banks of these canals are in great stress because the people who use these houses want to use them when they pass the house. Another thing is that, as far as my constituency is concerned, it is a fact that unless a man who keeps a public house has some other enterprise, so that what he loses on the swings he gains on the roundabouts, he is in danger of going very shortly into the bankruptcy court.

Sir A. HOLBROOK: Having regard to the statement made by the Chancellor of the Exchequer, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Allowance to children.)

Any allowance granted to a widow in respect of a child or children under the Royal Warrant of the second day of July, nineteen hundred and twenty, shall he, and shall be deemed always to have been, exempt from Income Tax.—[Mr. Rendall.]

Brought up, and read the First time.

Mr. RENDALL: I beg to move, "That the Clause be read a Second time."
This is really rather an important Clause. Yesterday we were discussing widows' allowances and we asked the Chancellor then to exempt these allowances from taxation. He said it would cost £100,000 and that it had been discussed 20 times previously and the House had refused to exempt this money. He also said it was unreasonable to put them in a better position now than they were four years ago. None of these arguments apply to this particular claim, because these are compassionate allowances. They
were granted for children during the War, and after the War was over and while they were called compassionate allowances there was no tax upon them. The Chancellor of the Exchequer got no Income Tax on these allowances given to the children until last year. The reason they did not bear Income Tax was that they were not made to the widow, but were made for the maintenance of the child. They were paid to the widow merely as guardian or trustee, and were for the benefit of the child. The Chancellor of the Exchequer shakes his head, but the words of the Royal Warrant are perfectly plain. Before the Royal Warrant there never was any doubt. The Army Council Lad absolute powers to pay these allowances to anybody. At no time had the widow any right to them. It then became the duty of the Ministry of Pensions to pay them, and they paid them to anybody they regarded as a fit and proper person. That was the position during the War and after the War was over. In July, 1920, it was decided by the Ministry of Pensions to put this matter on to a more permanent basis by issuing a Royal Warrant. The Royal Warrant abolished the compassionate allowance, and it was decided that the income of the widow should be increased by £36 a year for each child, but it was to be paid to her for the maintenance of the child. The point arises: Is this her income or is it not? The answer to that question has got to be decided, I think, according to the wording of the Royal Warrant itself. In Article 12, paragraph 5, the Royal Warrant says:
In any case in which, in the opinion of the Minister of Pensions, it may be necessary to secure the proper care of the child on behalf of whom an allowance is payable, the allowance, instead of being paid to the widow, may be administered under such conditions as the Minister may determine.
Those words make it clear to me, and I think to the Committee, that this is not a part of the widow's income. These words show that it is not intended for her benefit, that it is paid to her merely because she happens to he the nearest relative of the child, and the most convenient person to administer the money. Also, it gives the Ministry of Pensions absolute power to pay that money to another person if the widow is found not to be a fit and proper person. But in spite of that paragraph the Chancellor
of the Exchequer says, "It is the widow's income. The Royal Warrant uses the words 'widow's income.'" But I hope he will pay attention to what, I think, are very important words in the Preamble of the Royal Warrant:
No grant to an officer, or to the family or relative of an officer, or of a nurse, shall be re-assessed to their own disadvantage.
These words plainly show that when this Royal Warrant was prepared it was understood by the Ministry of Pensions and by all those who had to do with the preparation of it that no person who was to receive money under these allowances was to be assessed for any tax if he had not been formerly assessed. Therefore it seems to me that the Chancellor of the Exchequer is doing a most unjust thing in allowing the Treasury to apply for tax on these sums. He is taking advantage of some loose wording in the Royal Warrant and trying to get money which he ought not to claim. I hope the Committee will allow this Clause to go forward and that the Chancellor of the Exchequer may 'be able to accept it. It is simply because the framing of the Royal Warrant is a little different from what it ought to have been that he is able to make this claim at all. In correspondence with the Ministry of Pensions I asked why the Royal Warrant, had been drawn so carelessly. The Ministry of Pensions, I am given to understand, has had a long controversy with the Treasury on this matter, and was very surprised when the Treasury allowed the claim to be made. The Minister of Pensions, in writing to me, is not prepared to tell me all the facts about the controversy with the Treasury, but he does use this sentence in a letter written last March. He says:
It is probably the case that those who were responsible for framing the Warrant did not give special consideration to the point whether these allowances should be liable to tax, as this was not a matter within their competence to decide.
There is plain evidence that the Ministry of Pensions thought, in framing this Warrant, that it was not going to make these small allowances to children liable to tax.

Sir R. HORNE: The hon. Member has founded an elaborate argument on the selection of certain passages from the Royal Warrant and drawing the inference that the pension was a pension given
direct to the child and not to the widow. That is an entire contradiction of my reading of the Royal Warrant, or the reading of everybody who advises me on that topic. It is true, as he has said, that previously the matter was in the hands of the War Office, and they acted more or less in loco parentis to the child in dispensing the pension which the child got in respect of the dead father. When the matter was put into the hands of the Ministry of Pensions the whole scale of pensions was re-adjusted: a larger sum was given. The Royal Warrant, as it seems to me, explicitly declares that the pension is given to the widow. May I remind the hon. Gentleman of the phraseology of the Royal Warrant. It says:
The widow of an officer awarded a pension under the preceding article may be granted—
What?
—a further allowance at the rate of £36 a year for each child maintained by her.
Accordingly, it, is perfectly plain that the allowance for the child is a further allowance to the mother for the child maintained by her. It is perfectly plain that it forms part of the mother's income and not part of the separate income of the child.

Mr. RENDALL: It may be taken away-from the mother if the Ministry of Pensions thinks she is not using it properly for the child's benefit. How can that be the mother's income?

Sir R. HORNE: But just in the same way as in the case where a child has to be maintained separately by its parent. If the parent cannot maintain it, nevertheless a certain sum can be derived from the father by process of law which he is bound to pay for the upkeep of the child. In order to show that there is absolutely no injustice about this matter, apart altogether from what is provided by law, the Royal Warrant clearly states it by phraseology. Let me remind the Committee. In respect of the children the mother is granted remission of Income Tax. Take the case of a private soldier. In every case of a private soldier more remission in Income Tax is granted to the mother in respect of the child than the child can possibly obtain by way of pension—for the first child £40 and for every child thereafter £30. But no child of a private soldier gets a pension to so great
an extent, as that. Accordingly, the class which most requires the money their case is entirely met by the abolition of Income Tax that is given under the Order of the Finance Statute. Take the case of the officer. There the mother of the first child has greater remission in the way of Income Tax than the child could possibly obtain by way of pensions by several pounds. In the case of the second child the pension given would be rather more than the remission Income Tax. Thereafter for all succeeding children the difference is comparatively slight. Income Tax would not be paid upon more than a sum in respect of each of something like 15. Accordingly it cannot be treated both ways. If my hon. Friend's Motion were to be carried out, the mother would have to give up remission of Income Tax or else she has to bear this burden. In the case of the private soldier the widow would have to bear a greater burden in every case and by reason of my hon. Friend's Amendment I venture to put it to the Committee that there is no real ground for urging this.

Captain BOWYER: Only yesterday I was reminding the Committee, and the Chancellor of the Exchequer took exception to my words, that the further we get from the War the less was the remembrance of what we owe to those who suffered during the period of the War. Only to-night the Chancellor of the Exchequer is seeking, as far as my limited intelligence is able to follow mm, to put the children of the widow in the same position as the children of ordinary married persons when both parents are alive. The difference I seek to make is this: If the widow has children and if a separate grant is made to her or an allowance is made to her in respect of those children because her husband died, either was killed in the War or died because of injuries or illness suffered in the War, then the widow and her children ought to have not only the ordinary deduction in respect of her children, but ought to have the full rights of what the State gives as additional to what she would otherwise enjoy. There is one point which I think really brings the whole matter home. Is the Ministry of Pensions in agreement with the right hon. Gentleman, or is the Ministry of Pensions in disagreement with him. As far as I am led to suppose, not only does the Ministry of Pensions disagree with
him, but the whole of the ex-service movement throughout the country are unanimous on the subject and they consider the matter as one of vital importance. What I would ask the Chancellor of the Exchequer to do, irrespective of what he is going to do to-night, is that between now and the Report stage h?, will consult the Minister of Pensions whether the mistake has not been over the wording of the Royal Warrant of July, 1920, because, if we were correct in saying that the Ministry of Pensions has power not to appoint the mother as the administrator of the pension given to the children but to appoint another guardian, it stands to reason that the State cannot seek to recover from the mother Income Tax from any grant or pension which can be administered by a third party appointed by the Minister of Pensions as guardian of the children. I do think that absolutely differentiates the case from the example given by the Chancellor of the Exchequer when he sought to make these children and parents in the same position as the children of parents who did not suffer in the War, and both of whom were alive to-day.

.Mr. PENNEFATHER: I am very much in agreement with the last speaker, but I should like to carry a point he made rather further. I would like to put this to the Chancellor of the Exchequer. Suppose one of these children die the allowance stops, and that, to my mind proves that the allowance is made to the child and not to the mother. That is the great difference. This, I respectfully submit, proves, at any rate, to a very large extent, that the allowance is personal to the child.

Sir R. HORNE: If the child dies, to that extent the allowance is diminished.

Mr. PENNEFATHER: I think my hon. and gallant Friend who spoke last does make a differentiation between the ordinary individual and the case of a widow whose husband was killed in the War. We are dealing now with War orphans. I was one of the Select Committee who had a good deal to do with the framing of the recommendations, and I am sure it was not in the minds of that Select Committee that these allowances to children should be reduced by Income Tax. I think the suggestion a good one that the Chancellor of the Exchequer
between now and the Report stage should consult the Minister of Pensions and try to arrive at something which is really fair and reasonable in all the circumstances of the case.

Mr. S. ROBERTS: This matter, although a small one as far as money is concerned, is one of very great importance, and causes a tremendous amount of irritation and grievance. The reason is that for years no tax was claimed on these lives, and now after a period of years, when the War is being forgotten, the Inland Revenue comes down to seek to get Income Tax on these allowances. The real crux of the whole thing is that these allowances should be treated as income of the children. If the children have an income over the Income Tax allowance they will be taxed, but if they receive something under £125 it will not be taxed. I want to give the Chancellor of the Exchequer an instance of where these children of officers killed in the War are in a worse position than the children of civilians who have died. Any Member of this House who was reasonably prudent and anxious to make provision for his infant children would provide that the money should be held by trustees, the income to be paid for the benefit of the infant children. The money would go to the widow, exactly in the same way as this money, but because it would be treated as the income of the child it would not be regarded as the income of the widow, and she would not have to pay Income Tax on it. I feel this is a strong point and there is little money in it. It is not a question of changing the law, but of making it clear that this is the child's income and not the widow's.

Mr. PENRY WILLIAMS: I hope the Chancellor of the Exchequer will meet the point of the allowance to the widow for the child, or will arrange with the Ministry of Pensions to meet the point of this deduction. He must recognise that to grant to a widow whose husband fell in the War an allowance for a child and then to deduct something from the allowance by way of tax is repugnant to the public conscience.

Captain BOWYER: May I have an answer?

Sir R. HORNE: I am very willing, as everyone knows, to consult with any-
body who wishes to consult with me. Therefore, I shall be glad to see the Pensions Ministry and talk over the matter, but I cannot hold out any kind of hope that it is going to make any difference in the situation, because I know precisely where we stand in relation to the Pensions Ministry. If I find that there is any injustice or misunderstanding, I shall be very glad to alter it, but I cannot at the moment give the Committee any reasonable ground to believe so. All the aspects of this have been investigated, both my myself and those who advise me.

Captain W. BENN: Can the Chancellor of the Exchequer say whether he has any figure to show what this most reasonable concession would cost?

Sir R. HORNE: My impression is that it would cost £50,000.

Sir A. HOLBROOK: Can the right hon. Gentleman say whether the Royal Warrant contains a proviso for taking Income Tax off these pensions of children? Was it drawn in that way by some accident or error?

Sir R. HORNE: I have no reason to believe there was any error in the drawing. It was constructed at the time when pension rights were being increased. The suggestion was made that this was a sudden change from the practice of years. I do not know what is meant by the practice for years. Allowances for children have never existed before in this country to the extent to which they exist now.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 48; Noes, 111.

Division No. 190.]
AYES.
[1.57 a.m.


Armitage, Robert
France, Gerald Ashburner
Rae, Sir Henry N.


Barker, Major Robert H.
Goff, Sir R. Park
Richardson, Lt.-Col. Sir P. (Chertsey)


Barnes, Major H. (Newcastle, E.)
Hayday, Arthur
Richardson, R. (Houghton-le-Spring)


Benn, Captain Wedgwood (Leith)
Henderson, Lt.-Col. V. L. (Tradeston)
Roberts, Samuel (Hereford, Hereford)


Bigland, Alfred
Holbrook, Sir Arthur Richard
Royce, William Stapleton


Birchall, J. Dearman
Holmes, J. Stanley
Swan, J. E.


Bowerman, Rt. Hon. Charles W.
Hood, Sir Joseph
Thomson, T. (Middlesbrough, West)


Bowyer, Captain G. W. E.
John, William (Rhondda, West)
Thorne, G. R. (Wolverhampton, E.)


Brown, Brig.-Gen. Clifton (Newbury)
Jones, Morgan (Caerphilly)
Walsh, Stephen (Lancaster, Ince)


Bruton, Sir James
Kiley, James Daniel
Ward-Jackson, Major C. L.


Cope, Major William
Lawson, John James
Watts-Morgan, Lieut.-Col. D.


Davidson, Major-General Sir J. H.
Lyle-Samuel, Alexander
White, Col. G. D. (Southport)


Edwards, C. (Monmouth, Bedwellty)
Mallalieu, Frederick William
Williams, Penry (Middlesbrough, E.)


Entwistle, Major C. F.
Myers, Thomas
Wolmer, Viscount


Foot, Isaac
Nall, Major Joseph



Ford, Patrick Johnston
Newbould, Alfred Ernest
TELLERS FOR THE AYES.—


Foxcroft, Captain Charles Talbot
Newman, Sir R. H. S. D. L. (Exeter)
Mr. Rendall and Mr. Pennefather.


NOES.


Agg-Gardner, Sir James Tynte
George, Rt. Hon. David Lloyd
Moore-Brabazon, Lieut.-Col. J. T. O.


Amery, Rt. Hon. Leopold C. M. S.
Gibbs, Colonel George Abraham
Morden, Col. W Grant


Armstrong, Henry Bruce
Gilmour, Lieut.-Colonel Sir John
Moreing, Captain Algernon H.


Baird, Sir John Lawrence
Glyn, Major Ralph
Morrison-Bell, Major A. C.


Barlow, Sir Montague
Greene, Lt.-Col. Sir W. (Hack'y, N.)
Munro, Rt. Hon. Robert


Barnston, Major Harry
Greenwood, Rt. Hon. Sir Hamar
Murchison, C. K.


Bell, Lieut.-Col. W. C. H. (Devizes)
Greenwood, William (Stockport)
Murray, Rt. Hon. C. D. (Edinburgh)


Borwick, Major G. O.
Guest, Capt. Rt. Hon. Frederick E.
Murray, John (Leeds, West)


Boscawen, Rt. Hon. Sir A. Griffith-
Hacking, Captain Douglas H.
Neal, Arthur


Boyd-Carpenter, Major A.
Hannon, Patrick Joseph Henry
Nicholson, Reginald (Doncaster)


Bridgeman, Rt. Hon. William Clive
Harmsworth, C. B. (Bedford, Luton)
Pease, Rt. Hon. Herbert Pike


Broad, Thomas Tucker
Hennessy, Major J. R. G.
Percy, Lord Eustace (Hastings)


Beckley, Lieut.-Colonel A.
Herbert, Dennis (Hertford, Watford)
Perkins, Walter Frank


Burdon, Colonel Rowland
Hinds, John
Pollock, Rt. Hon. Sir Ernest Murray


Campion, Lieut.-Colonel W. R.
Hopkins, John W. W.
Raw, Lieutenant-colonel Dr. N


Carr, W. Theodore
Horne, Sir R. S. (Glasgow, Hillhead)
Remer, J. R.


Clay, Lieut.-Colonel H. H. Spender
Hunter-Weston, Lt.-Gen. Sir Aylmer
Roberts, Rt. Hon. G. H. (Norwich)


Courthope, Lieut.-Col. George L.
Inskip, Thomas Walker H.
Robinson, S. (Brecon and Radnor)


Cowan, D. M. (Scottish Universities)
Kellaway, Rt. Hon. Fredk. George
Roundell, Colonel R. F.


Davidson, J. C. C.(Hemel Hempstead)
Kidd, James
Sanders, Colonel Sir Robert Arthur


Davies, Thomas (Cirencester)
King, Captain Henry Douglas
Sassoon, Sir Philip Albert Gustave D.


Doyle, N. Grattan
Lane-Fox, G. R.
Scott, A. M. (Glasgow, Bridgeton)


Ednam, Viscount
Lindsay, William Arthur
Scott, Sir Leslie (Liverp'l, Exchange)


Edwards, Major J. (Aberavon)
Locker-Lampson, Com. O. (H'tlingd'n)
Seddon, J. A.


Evans, Ernest
Lort-Williams, J.
Seely, Major-General Rt. Hon. John


Eyres-Monsell, Com. Bolton M.
McLaren, Hon. H. D. (Leicester)
Shaw, Hon. Alex. (Kilmarnock)


Falls, Major Sir Bertram Godfrey
McLaren, Robert (Lanark, Northern)
Shortt, Rt. Hon. E. (N'castle-on-T.)


Fisher, Rt. Hon. Herbert A. L.
Manville, Edward
Smith, Sir Allan M. (Croydon, South)


Fraser, Major Sir Keith
Mond, Rt. Hon. Sir Alfred Moritz
Smith, Sir Harold (Warrington)


Ganzoni, Sir John
Montagu, Flt. Hon. E. S.
Stanley, Major Hon. G. (Preston)


Stanton, Charles Butt
Walters, Rt. Hon. Sir John Tudor
Wise, Frederick


Steel, Major S. Strang
Ward, William Dudley (Southampton)
Wood, Hon. Edward F L. (Ripon)


Sturrock, J. Leng
Waring, Major Walter
Young, Sir Frederick W. (Swindon)


Sugden, W. H.
Watson, Captain John Bertrand



Sutherland, Sir William
Wheler, Col. Granville C. H.
TELLERS FOR THE NOES.—


Thomson, F. C. (Aberdeen, South)
Williams, C. (Tavistock)
Colonel Leslie Wilson and Mr. McCurdy.


Thomson, Sir W. Mitchell- (Maryh[...]
Wills, Lt.-Col. Sir Gilbert Alan H.



Tryon, Major George Clement
Windsor, Viscount

NEW CLAUSE.—(Relief in respect expenditure for the welfare employs.)

Where any person shall after the thirty-first day of December, nineteen hundred and eighteen, have expended any capital sum on buildings or equipment, or which shall be provided in pursuance of any statute or regulation, or which in the opinion of the General Commissioners shall be for the benefit of his employés, such person, in computing the amount of the profits or gains to be assessed to Corporation Tax and Income Tax in respect of his trade or business, may after the passing of this Act deduct such an amount as shall be equivalent to interest on such capital expenditure at the rate of five per cent. per annum.—[Mr. Hannon.]

Brought up, and read the First time.

Mr. HANNON: I beg to move, "That the Clause be read a Second time."
The Amendment is one which, I hope, will command at least the sympathy of the Chancellor of the Exchequer. We are giving him a great deal of credit for sympathy, but the net amount of his concessions during the Debate has been comparatively small. Nobody in this House realises more than he the value of the work that is being done by a great number of employers in this country in providing opportunities for recreation and for the general moral and educational improvement of their workmen, and I think that [...]he investments which firms are making in order to provide these opportunities for improving the conditions of their workers ought to be treated with consideration by the Chancellor of the Exchequer. A great number of Members of this House were present at a meeting upstairs yesterday afternoon which I think was unprecedented in the annals of this House. A Member of the Royal Family came here and made a most striking speech on the importance of this industrial welfare movement. The Amendment asks my right hon. Friend to consider those employers who are desirous of supporting this work and have provided a certain investment for the purpose. I think they might expect to receive at the hands of the Exchequer the small amount asked for in relief.

Sir L. SCOTT: The Amendment is one that cannot possibly be accepted. It is a proposal to allow as a deduction on the calculation of income for Income Tax purposes capital expenditure. The whole scheme of the Income Tax Acts forbids any deduction whatever for any capital expenditure of any kind whatsoever. I am not quite sure whether the hon. Member who moved the Amendment regards the expenditure as one which is of a business character, or whether he regards it as a business expenditure for the purpose of promoting the interest of the business. No doubt welfare expenditure is of great value from a business point of view, and if it does it falls within the same category as all other forms of business expenditure. If, on the other hand, he says it is a form of altruistic or philanthropic expenditure, then, for additional reasons, it is outside the scope of any Income Tax allowance or deductions. Charity cannot be given by anybody at the expense and out of the pocket of the Exchequer. We all recognise the value of welfare work, and there is not a single Member of the Committee who is not anxious to see it promoted in every possible way, but, if you are dealing with taxation, deal with it from the only point of view possible, the fiscal point of view. In attempting by a back wind through taxation to deal with social reform or charity we are making a mistake.

Mr. KILEY: Surely the Solicitor-General is aware that it is possible for firms who contribute to hospitals and mental institutions to claim it, and if it is permissible in those cases surely the allowance can be made in the cases dealt with in this Clause?

Mr. SEDDON: I think the Solicitor-General has mixed up the two points. It may be charity or it may be business, but from the point of view of this Clause it is an attempt to see that justice is done to those men who treat their workpeople as human beings. If the hon. Member carries it to a Division I will support him.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Allowance for bad debts.)

If any person shall prove to the satisfaction of the Commissioners that debts taken as good in his final accounting period proved to be bad in whole or in part within six months from the end of that period and which had not already been allowed for, or were insufficiently allowed for in the accounts of his final accounting period, his profits or losses in the final accounting period shall be adjusted accordingly.—[Mr. Hannan.]

Brought up, and read the First time.

Mr. HANNON: I beg to move, "That the Clause be read a Second time."
The Clause asks for an allowance in the case of bad debts. This question has assumed very serious consequences for a large number of firms. At the end of the last accounting period they took various debts as good. Later it proved impossible to collect those sums of money which were outstanding, and the result has been that they have become liable for Excess Profits Duty on profits they never, in fact, secured at all. My Clause asks that six months' grace be given and that any debts of that kind within that period after the end of the accounting period shall be allowed for. The Clause is so drafted that any debt already allowed for is not to be allowed for again. The time limit of six months ensures that debts must have become irrecoverable at any date in the past and so rules out the possibility of fraud. I submit that this is a very modest proposal, and it is of great interest and moment to a large number of firms. Really it does not go so far as to give them the fullest possible measure of justice to which they are entitled. This question was fully discussed on tile Finance Bill last year, and I hope my right hon. Friend, realising the great struggle through which a large number of firms are passing and the great sacrifices which have to be made in order to recover their position and maintain any sort of figure in our industrial life, will give the matter full and fair consideration.

Sir R. HORNE: As my hon. Friend knows, by the arrangement I made in the Finance Bill last year I gave the greatest possible consideration to the plight in which the industry found itself. I met the traders of the country in every possible way. There was scarcely a suggestion which they made which I did not in some measure apply my mind to. Amongst other things, I extended the accounting period, the period in which
they might calculate stock for the purpose of writing down and allowed them to put the losses they had suffered against previous amounts of Excess Profits Duty paid. My hon. Friend's new Clause now seeks to extend still further the accounting period so far as bad debts are concerned. Quite frankly I am not in a position to extend the period further. I have no doubt there are cases in which calculations have proved to be not entirely accurate or entirely justified, but, on the other hand, I am sure that many debts may have been written off as bad debts which, in fact, have proved to he good. We arranged the matter in the last Finance Bill. I have no doubt that in some cases traders suffered and in other cases the Exchequer, but I do not think I can extend the point for the purpose of granting this relief now.

Sir NORMAN RAE: I wish to support my hon. Friend in asking acceptance of this Clause. The merchanting class of the West Riding of Yorkshire have suffered very severely indeed. Perhaps I may best put the point to the Committee by giving two concrete cases. In the case of one firm, which I will call A.B., the final accounting period was 30th November, 1920. This firm had a large number of accounts, both home and foreign accounts, which at that date were not paid. These accounts amounted to something like £8,516. At that time the merchants in the home trade were seemingly sound. The collapse that took place, look place after that date. The trading community generally did not believe that so many of the home trade merchants or of the foreign trade merchants would not be able to meet their liabilities. The débácle that came over the woollen and worsted trades was not expected, and when it did come the repudiation of contracts was greater than ever has been known in the history of the trade. This was not suspected in November, 1920, when this particular firm took stock. It did not make any reserve for possible bad debts on this £9,000. A short time after 30th November, when the stock was taken, and after the accounts had been audited, one of the principal customers of this firm had to call his creditors together. But because the accounting period of this firm ended on 30th November, 1020, they could get no allowance, and got no allowance to reclaim under the Excess Profits Duty, although the taxing authority took
60 per cent. out of the profits that they had made up to 30th November—that they were supposed to have made out of this particular firm who never paid the debt. There was another firm I will call C.D. Their accounting period ended on 31st March, 1921 they also did business with this particular firm. But before 31st March, 1921, this firm failed, and so they, C.D., did not pay the 60 per cent. on the profits that they had made. In the one case they, C.D., get out of the 60 per cent., and in the other the taxing authorities insisted upon the firm A.B. paying the 60 per cent. I put it to the Chancellor of the Exchequer, is it just in the one case to exact 60 per cent., and in the other case not to exact it? If the Chancellor of the Exchequer would put the period at which these duties shall be reclaimed, the same period that he agreed for the taking of stock, that is, 31st August, 1921, it would be a very fair proposition to make and would help trade very much. This proposition is not put forward in the interests of firms that have done well, and are doing well. It is put forward in the interests of firms that have suffered more than any other class of firms in the country. Unless we have these merchanting firms to go to to sell our goods throughout the world we are going to have very great difficulty in getting trade going, which we all wish to see. I do very earnestly press on the Chancellor of the Exchequer to agree that the period to which these had debts shall be reclaimed shall be 31st August, 1921, instead of the higgledy-piggledy system that has prevailed up to the present time.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Mineral Rights Duty.)

An owner paying Mineral Rights Duty shall for the purposes of Income Tax and Super-tax be allowed as a deduction or as a repayment in respect of expenses of management or supervision one-eighth of the amount upon which he is assessed for such duty.—[Deut.-Colonel Wheler.]

Brought up, and read the. First time.

Lieut.-Colonel WHELER: I beg to move, "That the Clause be read a Second time."
It is a simple point that I am asking for owners paying Mineral Rights Duty. As everybody knows, they have to employ
a mines engineer or some competent person in order to make the assessment of the income. They have to incur a certain amount of expense and should be allowed a legitimate amount of deduction for Income Tax for these expenses that are so created. It seems to me unfair that any owner of these rights should be called upon to pay the tax on what he cannot possibly receive.

Sir L. SCOTT: May I on behalf of the Government say that we accept this Clause, subject to an alteration in the amount. The principle of the Clause is obviously right. It is consistent with the whole scheme of the Income Tax Acts, and the cost will be trivial.

Captain WEDGWOOD BENN: We are very much interested in knowing how much it is going to cost. The Clause has been on the Order Paper for some time, and surely the officials could have made some calculation as to the cost. Some hon. Gentlemen asked for an allowance on Income Tax for widows, and the amount involved, £50,000, was refused. Now the Solicitor-General accepts another Amendment moved from behind by supporters of a certain way of thinking, and we ought to know what he is giving away in the way of revenue in view of what he declined to give away on other Amendments.

Mr. R. RICHARDSON: I am very sorry my Friend the Solicitor-General has accepted this Amendment. Surely these people have no claim to any reduction in Income Tax. The Solicitor-General must have forgotten that these people take all the money out of mineral rights and pay not one farthing in local taxation in any shape or form. We have raised the question and answer in the House selected from the various Departments as to their paying nothing towards what is being done locally, and they get clear of all this. In coming here and to ask for further reduction of taxation, it seems to me you are not dealing fairly with these people. The mine-owners and people who have risked their money and put it into mines, risking whether anything is to he got out or not—these people have not only to pay the taxes levied in this House but they have to pay the heavy local taxation.

Sir L. SCOTT: I think the hon. Member is under a misapprehension, and possibly other Members are, too. This is no concession; this is no relief from taxation of
anybody. Mineral Rights Duty is a duty that is to be paid by royalty owners on the amount of royalties. In order to get the money into their own pocket they have to collect the royalties. The collection of the royalties, as those hon. Members who are familiar with mines know, involves the employment of surveyors in order to check the amount of coal got each three months or six months, as the case may be, and a considerable amount of expense is involved in this. It is to allow the expenses of collection so as to make the tax payable on the net royalty received instead of on a gross sum, the whole of which in fact is not received.

Mr. R. RICHARDSON: I submit to the Solicitor-General these people are in no different position from other people who are engaged in industry. To give way in a matter like this is going to cause a tremendous amount of discontent in the country. This is the only way you get anything out of these people who get their money for little or no risk. I hope the Solicitor-General will reconsider his decision.

Major BARNES: I think we ought to he more clearly informed of what we are asked to do in respect to this Amendment. There are many people, probably, in this country who are in receipt of royalties on which they pay Mineral Rights Duty, and that at the present time they pay on the gross amount they receive, with no deductions allowed on account of expenses in ascertaining what amount is due to them and in collection. I understand that to be the position, and that the claim is put forward on the ground that, in respect of other kinds of income derived from other sources, deductions are made. All this Amendment does is to bring this particular kind of income under the same law applicable to other incomes. As a general proposition, I do not know that dissent can be offered, though question comes as to whether this amount here of one-eighth—

Sir L. SCOTT: I have said definitely we cannot agree to one-eighth. We must look into it very carefully in order to see if the allowance made is not more than the actual estimate for the cost of collection, so as to put it on exactly the same footing as expenses incurred in collecting any other form of income.

Major BARNES: On that point, I understand that what is going to be done
is that an inquiry is going to be made between now and the Report stage into what is a fair thing to deduct, and that when the Clause comes before us on Report the Government will be in a position to put before us the results of their inquiry.

Sir L. SCOTT: Exactly.

Mr. SWAN: The reception given to this proposal is a surprise to us. These people have absolutely no risks. They gather in enormous royalties, which are such a burden to all the industries of the country, adding to the cost of living and to the cost of our products in all the markets of the world. Now the Budget is to be re-cast in their favour.

The CHAIRMAN: It would not be in order now to discuss the Mineral Rights Duty. The only question is the cost of collection, and whether any allowance should be made for that.

Mr. SWAN: What we are disappointed at is, that this matter should be considered at all. These people are extremely well off as they are. They have no financial obligation, but they gather in immense sums. In spite of that we find that the Chancellor of the Exchequer is prepared to give them even a larger amount than they are receiving to-day. In this Budget the only people who are going to get concessions are those who are saddling the nation with big burdens. it is a shame. More human considerations, that should have received relief, have been waived aside. We had hoped that these people would have been called upon to face their liabilities instead of being given concessions.

Mr. R. McLAREN: In equity, what the Solicitor-General has agreed to is perfectly just. Royalty owners have to employ a large staff to look after the underground workings for the purpose of complying with certain laws and Regulations, and they are not allowed to charge the expenses. In the case of the colliery owner, who has to do the same thing, he employs a large staff and he is permitted to charge that against costs. It is perfectly just that what is right for one ought to he right for the other.

Mr. CHARLES EDWARDS: This may be a small point, but it is a very great principle, and I am surprised that it has been conceded. Only a day or two ago,
when we asked for some abatement for a man going by train to produce those minerals the Chancellor of the Exchequer refused. Now, when it comes to this, the Government give in. On other points, when they have refused, they have told us what the concession would cost. On this point they cannot tell us. I think the owners of royalties ought to be very glad to pay for the management of the money they are getting. We are now in the worst time, as a mining industry, that we have ever seen, but royalties come in just as before. The royalty owners are getting exactly what they got before, and they are now asking that the management should be paid out of the money that ought to go to the State. It is unfair and unjust, and we protest against it.

Mr. LAWSON: What I am surprised at is that we should be surprised at what has happened after our experience with this Budget. The Chancellor has got great kudos. He has become a strong man. If he goes on he will be the strongest Chancellor of modern times. I am surprised that hon. Members moving these Clauses did not come to an arrangement with the Chancellor of the Exchequer and then go home and leave him to talk about little concessions that we know we will not get. Take the case of the workman who asks for a small concession for expenses. He has to be charged Income Tax upon his gross income, but in the case of persons who are reaping wealth as the result of mineral rights, I have never heard a single person in this country justifying a person of that kind being allowed to deduct this expenditure from the amount of his Income Tax. This is a much bigger question than the Chancellor of the Exchequer realises. If he is going to give anything at all, he will have to be very cautious about it. Some colliery owners are at the same time royalty owners. We have a right to ask what this is going to cost the Exchequer. Time and time again we have asked that question. I would like to ask the Chancellor what is the total amount of the grants that he has given to the classes behind him. I venture to say it will amount to many millions. He is well on the way to becoming.a strong Chancellor, but a few more Chancellors of that kind will stir up a spirit which will not be good for this country.

Mr. WALSH: I think we are entitled to a little more information as to the reason why this concession has been made. After all, it is about 12 years since the Mineral Rights Duty became part of the fiscal policy. I suppose the concession will be greater than the one-eighth that is asked him. It may be made one-tenth on the Report stage. We know that at least 7 million pounds per year is paid on coal royalties alone, as distinguished from Super-tax, which is also included in this particular Clause. I think we might easily say that beyond the actual payment for mineral royalties, plus the payment that would be due for Super-tax, there would be not less than 8 million pounds involved.

Lieut.-Colonel WHELER: I think that the Sankey Commission put it at 6 million pounds.

Mr. WALSH: We know more than the Sankey Commission. It is considerably more than 6 millions. One shilling in the pound is, I think, the charge; therefore upon the minerals alone there is 4;350,000 in the year. If you take it at one-eighth, there is at least £44,000 being given away in a breath, and I am not now talking of the Super-tax. I do say it is impossible for the Chancellor to say that under existing conditions of financial stress there is anything which can justify him in giving this concession, especially when for 12 years no claim has been made by the royalty owners. It is perfect nonsense to say that royalty owners have a large staff of people watching the conditions under which their royalty arrangements are to he conducted. A mining engineer can do the whole lot easily. This Committee is entitled to know from the Chancellor what the conditions are which make it possible to give these reductions. We do not think it is right, but quite, wrong, and we think, in face of the refusal which the Chancellor of the Exchequer has probably felt himself compelled to give, it is not right that the class of the community who toil not nor spin should he given this concession. I trust the Committee will vote against it.

Mr. P. WILLIAMS: The Committee is entitled to receive from the Government some estimate of what this is going to cost the Revenue. As far as I remember, the Mineral Rights Duty includes not only
coal but the royalties paid on ironstone, limestone, lead and all the other minerals that are gotten in this country. I believe the total of that duty to the Revenue amounts to over a million pounds. If the Government is going to give away one-eighth or one-tenth it is going to give away the tax on £100,000, and Income Tax and Super-tax on that may amount to £50,000 and must amount to over £25,000. That is really a large amount to give, considering our experience to-night. I would like to call attention to the manner in which these concessions are being given wholesale by the Government to their friends behind them.

Mr. HANNON: No, they are not.

Mr. P. WILLIAMS: An hon. Member representing the landed interest gets up and proposes a new Clause which gives to his constituents the right to brew extra beer and he is welcomed with open arms. An hon. Member here gets up with a proposal for the reduction of the duty on soda water and he cannot have it. Now another hon. Member gets up and proposes a new Clause which will grant relief to owners of mineral rights and the Chancellor of the Exchequer accepts it at once. An hon. Member here gets up and moves a Clause which gives an exemption to widows from a small demand for Income Tax, and he cannot have it. It is not fair. The Government is treating the Opposition with contempt. We may be worthy of contempt, but I venture to remind the Government that they will not get their Finance Bill any the easier for treating us with contempt. We are entitled to know what this concession is going to cost, and unless the Chancellor of the Exchequer can give us the answer I beg leave to move to report progress.

Sir L. SCOTT: The last speaker is under some misapprehension as to what I said. I pointed out that, although we accepted the principle of the Amendment as we understood it, we were not sure as to the wording of it, and were not sure as to the figure of one-eighth. I said, in terms, that what we conceded as right was that the cost of collecting rents should be treated as a deduction, so that the tax should be paid only upon the net rent received, which, after all, is the man's income. I am not sure whether I used a phrase which was misleading to
the Committee, but I want to call the attention of the Committee to the wording of the Clause proposed. It says:
the owner paying Mineral Rights Duty.
That means the owner who is making an income out of the mineral rights or royalties, and therefore paying the Mineral Rights Duty shall, for the purpose of Income Tax and Super-tax, be allowed as a deduction, or as a repayment, in respect of the expenses of management or supervision, one-eighth of the amount upon which he is assessed for such duties. I am not sure what, the word "supervision" means. All we want to say to-night is that if this Clause be now withdrawn we will consider a form of words which will give the mere expenses of collection, so that the tax shall be paid only on the actual income the man receives, which is the ordinary principle of the Income Tax Acts. It is quite true that it has not been given before, but it. is an obvious injustice.

Mr. LAWSON: That is what I said about the widows.

Sir L. SCOTT: I am sure the hon. Member will forgive me for saying that that is an entirely different thing. In this particular case the man has been taxed upon income he has not got; because a man does not get the gross income, but only gets the net income. The question of the widow is the question of giving exemption upon an income she does get. I told the Committee that I could not say at present what it costs and that we must look into it and see what it does, and on the Report stage the House must be informed as to what it will cost. That is why I am asking for the withdrawal of the Motion now.

Captain W. BENN: I must draw attention to this extraordinary state of affairs. A Clause has been on the Paper for weeks stating specifically what the allowance is supposed to be, and now the Solicitor-General informs us that he cannot really say what the loss of revenue would be if it were accepted. He has pledged the Government to accept it in this or some other form, and yet he cannot tell us what the loss of revenue is going to amount to. In the case of any Amendment he is opposing he knows at once. This is bitter to us who supported the Budget in 1909, because this
is another hole, it is destroying another part of it—

Mr. MacCALLUM SCOTT: No.

Captain W. BENN: The hon. Member for Bridgeton (Mr. Macallum Scott) supported the imposition of the Mineral Rights Duty.

Mr. M. SCOTT: This is an allowance in respect of Income Tax and Super-tax, and not of the Mineral Rights Duty.

Sir R. HORNE: One thing has been said which has brought me to my feet, because I cannot let it pass. My hon. Friend the Member for East Middlesbrough (Mr. P. Williams) suggested that I had been treating my friends differently from what I had been treating hon. Members opposite. Practically all the instances he quoted as exemplifications of his statement were Motions which I had rejected. He instanced the case of the Mineral Waters Duty proposed by the hon. Member for Camlachie (Sir H. Mackinder), one of the strongest supporters of the Government in this House. Then the hon. Member for Moseley (Mr. Hannon) proposed a series of Amendments.

Mr. HANNON: Not one was accepted.

Sir R. HORNE: And so I could go on. I venture to say that for every Amendment proposed from the Benches opposite which has been rejected there have been three or four rejected which were from supporters of the Government.

Mr. P. WILLIAMS: Will the right hon. Gentleman deal with the question of the Beer Duty?

3.0 A.M.

Sir R. HORNE: Although the proposal was made by an hon. Member behind me, it is obviously not a proposal in his favour. It is a proposal in favour of the workmen living in his part of the country who find the burden of existence very severe. My hon. Friends opposite always make the mistake of supposing that there must be divisions between people which make them hostile to each other. I beg them to get rid of that notion as early as possible. As to what my hon. and gallant Friend the Member for Leith (Captain W. Bonn) has said, I should like him to read this proposed Clause. It does not deduct anything from the Mineral Rights Duty at all.
It allows for Income Tax purposes expenses which he incurs in collecting his income. People do not pay upon the gross receipts that they get. In a shop they pay upon what they have got after deducting the expenses of running the shop. Let me take the case of the miners. They deduct from their income the cost of their tools. The case is not made any better for my hon. Friend, who says it has been so long delayed and that the allowance has been due for some time. What is proposed in this Clause is that there shall be deducted before assessment for Income Tax the expenses he is put to before he gets the amount that is included in his income. The thing is so patent, and the Royal Commission on Income Tax, which reported not so long ago, refers to the matter under Section 5. In regard to property-owning companies:
These companies shall be granted an allowance for their management expenses to the same extent as financial companies.
With regard to owners of mineral or mineral rights:
The owner of Mineral or Mineral Rights shall be allowed the expenses of management or supervision.
That Report is signed by several Labour Members of this House, none of whom took any exception to the general conclusion to which the whole Commission came. It is perfectly ridiculous to suggest that there is any new principle sought to be established. One of the hon. Member's coadjutors on that side of the Committee, who spoke with great experience of these matters, was obviously deprived of any argument on the matter. Accordingly, I venture to submit to the Committee that we ought now to he allowed to do what we have suggested, that the Clause should be withdrawn and that we should put down on the Report stage words which will be necessary to carry out the proposal. I wish to make known to the Committee that I cannot say accurately or even approximately at the present time the cost which will be involved in this proposal. In my view it will not exceed something like £25,000.

Lieut.-Colonel WHELER: I beg to ask leave to withdraw the Motion.

HON. MEMBERS: No.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE. (Increase of Imperial Preference on Sugar.)

The preferential rate of duty to be levied on sugar consigned from and grown, produced, or manufactured within the British Empire shall be two-thirds of the full rate instead of five-sixths of the full rate as provided for under section eight of The Finance Act, 1919 (which relates to imperial preferential rates).—[Mr. Rioland.]

Brought up, and read the First time.

Mr. BIGLAND: I beg to move, "That the Clause be read a Second time.
The idea in our minds in proposing it is not that we should get the Chancellor of the Exchequer to-night to accept this proposal, but that we wish to bring before him the great need there will be in the years to come to take further action with regard to the preferential rate that is now allowed upon all goods grown within the Empire. We passed a few weeks ago in this House the Empire Settlement Bill, and under that our people will be encouraged to make homes overseas, and we feel that in encouraging these men to make their homes overseas it will be our duty here in the homeland to encourage them to this extent, that whatever they grow within the Dominions that we here at home will take these products with a larger preferential duty than we give now. Three years ago this House decided that on all Customs Duty that we levied on sugar, tea, tobacco and other products, that one-sixth of that duty shall be rebated to the products grown within the Empire. The idea in this Amendment is that that one-sixth shall be increased by a further amount so that it will bring it practically up to one-third of the whole duty that is levied as rebate on goods grown within the Empire. I do feel that this matter is one of very great importance. I will point out that the reason why America got populated so fast was that when a man went to the States he found that 90 millions of people gave a preference to the things that he grew under the "Stars and Stripes." People did not realise why people went to the States in such large numbers and to Norway, Denmark and other parts in Europe. It was because of the preferential rates given to those who settled there. I want in the development of our Empire that there shall be that same feeling, and when men go to other parts of the Empire and produce goods that we require, it shall be understood that we shall give them better
terms than we give some goods from foreign producers. I have pleasure in moving this new Clause.

Sir R. HORNE: I do not gather that my hon. Friend really expects me to deal seriously with this Amendment at this hour.

Mr. BIGLAND: No.

Sir R. HORNE: All I can say to the Committee is that at the present time such a Clause is not capable of acceptance.

Question, "That the Clause be read a Second time," put, and negatived.

NEW CLAUSE.—(Excise duties on homegrown tobacco to cease.)

(1) The duties of excise chargeable under section seven of The Finance Act, 1918, and sections eight and nine of The Finance Act, 1919, in respect of tobacco grown in Great Britain (in this section referred to as "non-dutiable tobacco") shall (except as regards goods in respect of which the said duties have been paid) cease and determine as from the commencement of this Act.
(2) Notwithstanding anything in any Act, the Commissioners of Customs and Excise may, subject to the prescribed conditions, permit a person manufacturing tobacco in bond to receive non-dutiable tobacco at his bonded premises and to deliver therefrom without payment of duty a corresponding quantity of tobacco.
(3) In this section the expression "prescribed" means prescribed by regulations made by the Commissioner of Customs and Excise.—[Viscount Wolmer.]

Brought up, and read the First time.

Viscount WOLMER: I beg to move, "That the Clause be read a Second time."
What we are asking for is the protection of the industry of tobacco growing in this country until such time as it shall be able to establish itself. The reasons upon which this is put forward are, briefly, as follows: Tobacco was once grown on a very large scale in this country. It was once grown in no fewer than 31 different counties. In the year 1660 it was prohibited by Act of Parliament. In 1910 a Liberal Government made the growing again permissible, but the Government not only did that, but on 1st January, 1911, they granted a protective rebate of 30 per cent. to English-grown tobacco in order to establish the tobacco-growing industry, thereby following out the well-known maxims of
Adam Smith and Cobden that an infant industry can be protected consistently with Free Trade principles. In 1913 the contribution was altered by a grant of 820,000 from the Development Commission for English-grown tobacco. That was not nearly so successful. The acreage under tobacco, which had reached 140 acres, declined in two years to about 40 acres, and the great bulk of the money of the Development Commission was spent on administrative expenses and unprofitable expenditure. But what has really put the English tobacco industry in such a ruinous condition—and this is the point I wish to bring before the Chancellor of the Exchequer—was not only the events of the War when all acreage was devoted to growing food that could possibly be devoted to it, but the policy of the Government themselves in regard to Imperial Preference. In 1919, the Lord Privy Seal, then Chancellor of the Exchequer, granted a preference to Empire-grown tobacco of one-sixth of the duty, and that preference was extended to English-grown tobacco as well. For all practical purposes English-grown tobacco and Empire-grown tobacco was put on an absolute equality, whereas under the Liberal Government English-grown tobacco had been given a rebate of 30 per cent. over Empire-grown tobacco. The vast bulk, more than 90 per cent. of the tobacco imported into this country, comes from America, and the utmost that either the English or any other growers who are trying to get the English market can hope to achieve is to get a very small share which can be blended with the American tobacco.
Tobaccos coming from warmer countries, and chiefly because they belong to a longer established industry, are able to compete successfully at present with English-grown tobacco on level terms. The point is that if you want to establish an English tobacco growing industry you have to protect it in its initial stages, not only against American but also against Colonial tobacco. I would like to point out that that is perfectly consistent with the policy of Imperial Preference. That is what the Colonies have done themselves. They have given a preference to British goods over the foreigner, and a preference to their own goods over British goods. I, therefore, move that English-grown tobacco should be treated as the
Government are treating English-grown sugar and exempt it- from Excise Duty, and give it a preference over Colonial imported tobacco. Unless the Government do that, it is impossible to establish the English tobacco growing industry. It is worth while establishing.
It is an industry which was destroyed by Act of Parliament. It is an industry which gives a-n enormous amount of employment in countries in Europe. In France at this moment there are over 32,000 acres under tobacco, and they are all farmed by very small men. Indeed there are over 40,000 growers. [An HON. MEMBER "Divide!"] If the hon. Member does not wish to listen, he can go home. In Germany at the present moment there are over 25,000 acres under tobacco: in Hungary over 50,000 acres, and tobacco is even grown in countries like Norway and Sweden. It is a complete fallacy to think that tobacco-cannot be successfully grown in this country. At the present moment it is grown in my constituency. I have cigarettes here which were grown in my constituency, which I shall be delighted to offer to any hon. Member. The tobacco is very much like Rhodesian tobacco of a light sort.

Mr. FRANCE: What do you call the cigarettes?

Viscount WOLMER: Hampshire cigarettes.

Mr. FRANCE: Do you smoke them?

Viscount WOLMER: Yes, though personally I am a pipe smoker. There are other reasons why the tobacco-growing industry should he encouraged. Tobacco is grown on the very lightest soils. It is grown on the sands round Aldershot, which will not bear an ordinary crop. For that reason it is grown in parts of Berkshire and Norfolk. Therefore, if you encourage tobacco growing, you can bring a great acreage of soil under cultivation which you cannot do with any other crop, and that soil, subjected to high manurial treatment, becomes capable of growing oats, barley, and potatoes, and can, therefore, be made a potential food reserve in time of war. It is worth while establishing this industry, which was once flourishing and was destroyed by the action of the State. It gives employment to thousands of people in France,
Germany, and other European countries. You cannot establish it unless you are to give it efficient protection, not only against American tobacco but against Colonial. That was recognised by a Liberal Government, and I ask that this Government should grant a remission of Excise Duty. If the Chancellor of the Exchequer feels that he cannot go the whole way in granting us what we ask, I would ask him to receive a deputation of growers, who will be able to show him that this is absolutely necessary if the industry is to be saved. This protection is necessary for at least. 10 years before you can ascertain the exact type of tobacco which will grow beat—there are over 30 different types of tobacco—until you have generated the necessary skill for the growing process and until you have found out exactly which type of manure and which treatment produces the best results. Until the industry has passed out of the experimental stage you have got to give protection, and efficient protection, and that can he done by the most wholehearted Free Trader.

Sir R. HORNE: I admire the enthusiasm with which the Noble Lord defended a certain portion of his constituency. I fear that it is not altogether sufficient to make me accept this Clause. He has compared tobacco-growing with sugar-growing, but as far as I can see there is no real comparison between the two crops. Nor can it be suggested that there are the same hopes that the manufacture of tobacco can be carried out in the same way and with the same benefit as the manufacture of sugar. Tobacco has had a much longer opportunity than the sugar industry has had, and, unfortunately, the results up to now have not been very hopeful; so much so that the Noble Lord is constrained to say that he cannot see until 10 years elapse whether in point of fact the encouragement of this industry is going to have any fruitful results or not. In these circumstances I do not think it is fair to ask the Committee that the Excise Duty should he remitted. The Noble Lord has also asked me whether I shall be content to receive a deputation upon this matter. I am always glad to see representatives of any body of people in the interest of the country if I can find time, and I will readily agree to receive the deputation which he desires.

Viscount WOLMER: If the right hon. Gentleman will consider the matter further, I propose, with the consent of the Committee, to withdraw the Clause.

Captain W. BENN: Before the Clause is withdrawn I think some attention ought to be drawn to the position of the Government. There is not a single argument which the Noble Lord has brought forward to-night for the protection of tobacco which was not brought forward with success by the promoters of homegrown sugar. I listened with great interest to the Chancellor of the Exchequer's speech at that time. What were the reasons he urged for extending protection to the industry? He said, first of all, that there was nothing to be gained by imposing the duty. Does he allege that the excess duty imposed on tobacco is something that he is looking after? Then he went, on to say that he received a deputation from this interest and have no doubt that the tobacco industry will also send a deputation. He also said that sugar was suitable for growing in this country. That point was also made by the Noble Lord. Then the Chancellor went on to say that the sugar industry was an infant industry, and employed a large number of people, and he quoted us these words:
In the present circumstances this is not the time to give up an industry which has made a promising start and that has been helped by the extraordinary circumstances of the times, and this industry has not much chance for the future unless it is assisted, otherwise it would deprive people of employment.
What single argument is there which is not a good argument for the protection of tobacco or any other industry which can bring sufficient pressure to bear upon the Government? The Government have entirely given away their position about. Protection. Bit by bit they are carrying out a Protectionist policy. There is no logical reason why, having given the remission of the excise to the home-grown sugar, they should not. give it to homegrown tobacco or anything else. The only thing that surprises me is that the Postmaster-General, who is a Free Trader, should continue to support a policy of this kind, and that others who also call themselves Free Traders should continue to support a Government which is a Protectionist. Government.

Mr. BIGLAND: I just want to correct the Chancellor of the Exchequer on one point, and that is when he said that this industry has not been a success in this country. He has not been in the House as long as I have, and I remember when the late Mr. William Redmond made a most powerful appeal some years ago with regard to tobacco-growing in Ireland. At that date the industry had nothing like the rate of preference asked for in this Clause, but Mr. Redmond assured-us that he could procure quality and quantity of tobacco which would surprise us all. I do hope that the Chancellor will not only receive the deputation suggested, but give the whole matter his very careful consideration.

Mr. LYLE-SAMUEL: Does the Chancellor of the Exchequer mean that at the present moment his mind is definitely fixed that this year at least he is not going to make any remission? The principle could be applied to many products which we receive from various parts of the world. We could grow cocoanuts and bananas and all the cotton we receive in this country under glass, and there is no limit on the demands which can be made on the Exchequer. I merely wish to ask the Chancellor whether we properly understood him to mean that his decision was final for the present.

Viscount WOLMER: I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE (Income Tax Act (1918) Admendment.)

That for Schedule A, Rule No. VI., paragraph (c), of The Income Tax Act, 1918, there shall be substituted the following:—

(c) The amount of the tax charged on any hospital, public school, or almshouse, in respect of the public buildings, offices, and premises belonging thereto, including premises occupied by any individual officer or the master thereof, so far as not occupied by a person paying rent for the same.

—[Captain Wedgwood Benn.]

Brought up, and read the First time.

Captain W. BENN: I beg to move "That the Clause be read a Second time."
I have put down this Amendment at the request of the Education Authority of the City of Edinburgh, and many other
education authorities are, I believe, in agreement with it. So far the Inhabited House Duty has not been collected upon the residence of the schoolkeeper, or janitor as he is called in Scotland. Owing to the fact that the wages of these people have risen in the last few years, their houses have ceased to come under the exception mentioned in my new Clause. My proposal is that the house should be excepted from the duty. The income of the janitor has nothing to do with it. The effect of the present position is that the education authority is taxed in a way in which it was never intended it should be taxed. The amount of money is small—in the City of Edinburgh it is under £200 a year—but it is a vexatious and unnecessary position, and I beg the Government to consider favourably this Clause.

Sir R. HORNE: I am afraid I cannot assent to the proposal of my hon. and gallant Friend. I agree that the matter is small, but I cannot agree that it is vexatious. The change which has taken place has brought the janitor in some cases above the Income Tax exemption limit. Accordingly, the house fails to get the exemption which previously it had enjoyed. It is a small matter in connection with this particular class of cases, but it is obvious that there might be wide extensions if the principle is once applied. It would mean that because wages or salaries had risen in particular instances, therefore the limit of exemption should be raised. If money became cheap and people had more of it to spend, one must raise all the limits of the Income Tax Schedule. Obviously, that is too wide a principle to apply. It requires more consideration. Under the circumstances I cannot accept the Clause.

Mr. LYLE-SAMUEL: This proposal refers to any hospital, public school or almshouse, limiting this entirely to janitors or such persons who are occupying positions in publicly provided institutions. We are not asking the Chancellor to make a general concession, for I quite agree that where wages or salaries had been increased the Chancellor would then find himself embarrassed.

Lieut.-Colonel HENDERSON: This is peculiarly a Scottish question and probably the Chancellor of the Exchequer is not aware that the Secretary for Scot-
land did promise that this should receive consideration.

Sir R. HORNE: I have given it great consideration.

Lieut.-Colonel HENDERSON: He has given consideration to it in the sense that he has said that it cannot be accepted. That is not what the Scottish Office said when we discussed it with them. The whole point is that you are expecting education authorities to pay on

NEW CLAUSE.—(Repeal of 8 & 9 Geo. V, c. 40, s. 70.)

Section seventy of the Income Tax Act, 1918, is hereby repealed.—[Mr. Pennefather.]

Brought up, and read the First time.

Mr. PENNEFATHER: I beg to move, "That the Clause be read a Second time."
I will give a short explanation of what we mean by this new Clause. Section 70
something which, according to the Act of 1918, they were never supposed to pay on at all. This particular Amendment does create a difficulty, but cannot the right hon. Gentleman find some other form of words. I think it might be possible if the Scottish legal advisers were here.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 20; Noes, 118.

Division No. 191.]
AYES.
[3.38 a.m.


Barnes, Major H (Newcastle, E.)
Holmes, J. Stanley
Swan, J. E.


Benn, Captain Wedgwood (Leith)
John, William (Rhondda, West)
Thomson, T. (Middlesbrough, West)


Bowerman, Rt. Hon. Charles W.
Jones, Morgan (Caerphilly)
Walsh, Stephen (Lancaster, Ince)


Edwards, C. (Monmouth, Bedwellty)
Lawson, John James
Watts-Morgan, Lieut.-Col. D.


Ford, Patrick Johnston
Lyle-Samuel, Alexander



Glyn, Major Ralph
Richardson, R. (Houghton-le-Spring)
TELLERS FOR THE AYES.—


Hayday, Arthur
Royce, William Stapleton
Mr. Penry Williams and Mr. Foot.


Henderson, Lt.-Col. V. L. (Tradeston)
Shaw, Hon. Alex. (Kilmarnock)





NOES.


Agg-Gardner, Sir James Tynte
Hacking, Captain Douglas H.
Raw, Lieutenant-Colonel Dr. N.


Amery, Rt. Hon. Leopold C. M. S.
Hannon, Patrick Joseph Henry
Remer, J. R.


Armitage, Robert
Harmeworth, C. B. (Bedford, Luton)
Richardson, Lt.-Col. Sir P. (Chertsey)


Armstrong, Henry Bruce
Hennessy, Major J. R. G.
Roberts, Samuel (Hereford, Hereford)


Baird, Sir John Lawrence
Herbert, Dennis (Hertford, Watford)
Robinson, S. (Brecon and Radnor)


Barker, Major Robert H.
Hinds, John
Roundell, Colonel R. F.


Barlow, Sir Montague
Holbrook, Sir Arthur Richard
Sanders, Colonel Sir Robert Arthur


Barnston, Major Harry
Hopkins, John W. W.
Sassoon, Sir Philip Albert Gustave D.


Bell, Lieut.-Col. W. C. H. (Devises)
Horne, Sir R. S. (Glasgow, Hillhead)
Scott, A. M. (Glasgow, Bridgeton)


Blgland, Alfred
Hunter, General Sir A. (Lancaster)
Scott, Sir Leslie (Liverp'1, Exchange)


Birchall, J. Dearman
Inskip, Thomas Walker H.
Seddon, J. A.


Barwick, Major G. O.
Kellaway, Rt. Hon. Fredk. George
Seely, Major-General Rt. Hon. John


Bescawen, Rt. Hon. Sir A. Griffith-
Kidd, James
Shortt, Rt. Hon. E. (N'castle-on-T.)


Bowyer, Captain G. W. E.
King, Captain Henry Douglas
Smith, Sir Allan M. (Croydon, South)


Boyd-Carpenter, Major A.
Lane-Fox, G. R.
Stanley, Major Hon. G. (Preston)


Bridgeman, Rt. Hon. William Clive
Lewis, T. A. (Glam., Pontypridd)
Stanton, Charles Butt


Broad, Thomas Tucker
Lindsay, William Arthur
Steel, Major S. Strang


Bruton, Sir James
Locker-Lampson, Com. O. (H'tlngd'n)
Sturrock, J. Leng


Buckley, Lieut.-Colonel A.
Lort-Williams, J.
Sugden, W. H.


Burdon, Colonel Rowland
McLaren, Hon. H. D. (Leicester)
Sutherland, Sir William


Campton, Lieut.-Colonel W. R.
McLaren, Robert (Lanark, Northern)
Thomson, F. C. (Aberdeen, South)


Carr, W. Theodore
Macquisten, F. A.
Thomson, Sir W. Mitchell- (Maryhill)


Cope, Major William
Malialleu, Frederick William
Thorpe, Captain John Henry


Courthope, Lieut.-Col. George L.
Manville, Edward
Tryon, Major George Clement


Cowan. D. M. (Scottish Universities)
Mond, Rt. Hon. Sir Alfred Moritz
Walters, Rt. Hon. Sir John Tudor


Davidson. J. C. C. (Hemel Hempstead)
Moore-Brabezon, Lieut.-Col. J. T. C.
Ward, William Dudley (Southampton)


Davies, Thomas (Cirencester)
Morden, Col. W. Grant
Ward-Jackson, Major C. L.


Doyle, N. Grattan
Moreing, Captain Algernon H.
Waring, Major Walter


Edwards, Major J. (Aberavon)
Morrison-Bell, Major A. C.
Watson, Captain John Bertrand


Evans, Ernest
Munro, Rt, Hon. Robert
Wheler, Col. Granville C. H.


Eyres-Monsell, Com. Bolton M.
Murchison, C. K.
Williams, C. (Tavistock)


Falle, Major Sir Bertram Godfrey
Murray, Rt. Hon. C. D. (Edinburgh)
Wills, Lt.-Col. Sir Gilbert Alan H.


Fraser, Major Sir Keith
Murray, John (Leeds, West)
Windsor, Viscount.


Ganzoni, Sir John
Neal, Arthur
Wise, Frederick


George, Rt. Hon. David Lloyd
Newman, Sir R. H. S. D. L. (Exeter)
Wood, Hon. Edward F. L. (Rloon)


Gibbs, Colonel George Abraham
Nicholson, Reginald (Doncaster)
Young, Sir Frederick W. (Swindon)


Gilmour, Lieut.-Colonel Sir John
Pease, Rt. Hon. Herbert Pike



Goff, Sir R. Park
Pennetather, De Fonbianque
TELLERS FOR THE NOES.—


Greenwood, Rt. Hon. Sir Hamar
Percy, Lord Eustace (Hastings)
Colonel Leslie Wilson and Mr.


Greenwood, William (Stockport)
Perkins, Waiter Frank
McCurdy.


Guest, Capt. Rt. Hon. Frederick E.
Pollock, Rt. Hon. Sir Ernest Murray

of the Income Tax Act, 1918, gives permission to corporations to appoint three to seven members of the corporation as Income Tax Commissioners in relation to persons employed by them. That Section applied to every city in the country, but in practice it only applies to London and Liverpool, so I am informed. A great many of the corporation employés in Liverpool object to it, and I think the
shortest way of stating the case is to read a brief extract from a letter from the Liverpool and District Teachers' Association, written on their behalf and on behalf of other servants of the corporation.
They desire that they shall be assessed by the local Surveyor of Taxes to enable them to obtain notice of assessment and receipts for the amounts paid. By Section 70 of the Income Tax Act, which in practice is only applied to Liverpool and London, Income Tax deductions have been made by the Liverpool Corporation, no notice of assessment or receipt being furnished to the taxpayer. This has led to much inconvenience and hardship. The Royal Corn-mission on Income Tax has made a recommendation for the transfer of the duty of assessing employés under Schedule E to the Inspector of Taxes.

Mr. LYLE: Why does it only apply to London and Liverpool?

Mr. PENNEFATHER: Section 70 gives permissive powers to all corporations of cities. The point is that these Commissioners are only appointed in London and Liverpool. I cannot speak for London. It seems to have gone to bed, but although it is a quarter to four in the morning, Liverpool is awake. The Liverpool Corporation employés only ask to be placed on the same footing as the employés of great towns like Manchester, Birmingham and Glasgow. [An HON. MEMBER: "Justice all round!"] Precisely. It is not unreasonable that they should be so treated. These people say that they are suffering hardship and inconvenience which is not suffered by other ordinary citizens who are employés of the corporations in other great cities of the country.

Sir R. HORNE: I appreciate the point which my hon. Friend has made. I am not sure I am entirely out of sympathy with him because the employés have made him their spokesman.

Mr. PENNEFATHER: It is only an accident that I am their spokesman. The names of four other Liverpool Members are down to the Clause.

Sir R. HORNE: I will give my hon. Friend the assurance that I shall look into any defects that there are in regard to this matter in the course of next year. I do not think that there is an immediate grievance that wants to be remedied, but
I shall certainly look into the question and remedy any grievance that I find to exist.

Motion and Clause, by leave, withdrawn.

The CHAIRMAN: The proposed new Clause to be inserted after Clause 26, standing in the name of the hon. Member for Watford (Mr. Dennis Herbert)—[Amendment of s. 38 (3) of 5 & 6 Geo. V, e. 89]—is not, T think, in order, as it might increase the charge.

Mr. DENNIS HERBERT: Is not my new Clause in order?

The CHAIRMAN: No, in certain circumstances it might increase the charge. It is not very easy for me to make the point clear at this hour of the morning, but there is no doubt that in certain circumstances it might increase the charge.

Mr. DENNIS HERBERT: I am very sorry, but I cannot follow how it can increase the charge.

The CHAIRMAN: I do not wish to do the hon. Member an injustice, and we may have some light en the point from the Chancellor of the Exchequer.

Sir R. HORNE: I cannot venture to explain what my hon. Friend means by the Amendment, because I have difficulty in understanding it.

NEW CLAUSE.—(Amendment of Section 38 (3) of 5 & 6.Geo. V, c. 89.)

(1) Where a part only of the interest in any trade or business of any person, being the proprietor thereof or a partner therein, passes by any means to some other person or corporation, then one-half of the remaining part of such interest shall for the purpose of Sub-section (3) of Section thirty-eight of the principal Act (which allows a repayment of or set off against Excess Profits Duty in case of deficiency or loss) be treated as if it were the original interest of such first-named person.
(2) Where the interest or any part of the interest in any trade or business of any person, being the proprietor thereof or a partner therein, passes by any disposition to a company registered under the Companies Acts, 1908 to 1917, but the person retains the beneficial interest in the whole or in any part of his original interest by reason of being the owner of capital of such company, then, for the purpose of Sub-section (3) of Section thirty-eight of the principal Act one-half of the whole or of such part of his interest, as the case may be, shall be deemed not to have passed from such person.
(3) Any repayment of or set-off against Excess Profits Duty to which any person
2281
may be entitled under this Section shall not be payable immediately but shall be payable by five equal annual instalments.—[Mr. Dennis Herbert.]

Brought up, and read the First time.

Mr. D. HERBERT: I beg to move, "That the Clause be read a Second time."
The Clause was put down as a result of a promise which the Chancellor of the Exchequer was good enough to give me when discussing Clause 26 of the Bill. Clause 26 refers to what is described here as a Section of the principal Act, and under which any person or firm who has paid Excess Profits Duty and afterwards makes a big loss can obtain a repayment from the Government in respect of that loss. It has been held that that right to recover does not apply to the business but only to the actual person or firm engaged, and, therefore, if the business changes hands the right is lost. Clause 26 of the Bill dealt with the case where the business changed hands, as between father and son, or husband and wife, or wife and husband, and it was agreed that that should not be taken as a change of proprietorship. It was then asked that that right should not be lost by reason of the fact that a man or a firm parted with a part of their business, but not with the whole of it, and that it should not be lost if a man or a firm technically parted with the business by means of the reconstruction of a company or by the transfer of the business to a company in which the same persons held the interest by holding it in the form of shares. The Chancellor o the Exchequer was sympathetic with the proposal that these two cases should be let in, but I think the principal objection was that it would cost too much, and the second one was that it would not be easy to draw a line which would clearly define the persons who should be brought into this particular form of relief. I have ventured to put down this Clause with a view to bringing back into the right to obtain this repayment two classes and two classes only, namely, the man who has parted with a portion of his business, and, secondly, the man who has not really parted with his business at all, but takes it in the form of shares in a limited company instead of in the original form. In order to get over the Chancellor's objection that the concession would cost
too much I ask that they may have not the whole of what they would be entitled to if there was no change, but that they may have 50 per cent. of it, and have it. spread over a period of five years.

The CHAIRMAN: The hon. Member's point is that in a case of deficiency on which a claim could have been made for a return of Excess Profits Duty, and where that right has lapsed because of something done, the party should be able to get back one-half of the duty. That seems to be a case in which the Clause would impose a charge.

Mr. D. HERBERT: I do not think that can possibly be so. This is a case of getting a repayment out of profits which have been paid in the form of Excess Profits Duty, and a very slight repayment, because I am only asking for 50 per cent., and to have that spread over five years. What I am asking the Chancellor to give this year is only one-tenth of what it would cost him if he brought in these people in the ordinary way. With regard to future years, I suggest that the number of firms which will probably be saved from going out of business altogether by having this addition to their credit in these difficult times will probably so help trade and so increase the amount assessable to Income Tax in the next four years that the small charge that there will be in the coming four years will probably be fully met by the improvement in the condition of these firms by reason of this slight concession. No doubt by this time the Chancellor can say how much it would cost. If this concession would still cost too much r and the many other Members who feel very strongly on the question of these struggling firms, will be very grateful for anything which the Chancellor can give us on these lines.

4.0 A.M.

Sir L. SCOTT: On a point of Order. I submit that the Clause does transgress the rule, because it might clearly put on an increased charge. Imagine anyone who pays Excess Profits Duty to the extent of £3,000 and who parts with half of the business to somebody else. As the law stands at present he can set off £3,000 against the £3,000 he has paid. Under the Clause he can only set off £1,500 of that £3,000.

Mr. HERBERT: He is not now entitled to recover the £3,000. Because he cannot
recover that sum I am asking that he be allowed to recover the £1,500.

The CHAIRMAN: In view of the uncertainty on the subject, and the delay in elucidating it, I am bound to put the Clause.

Sir L. SCOTT: I accept on the part of the Government your blame for not having elucidated the Clause before now, but to be perfectly frank we find the Clause a difficult one to elucidate—[HON. MEMBERS: "Why?"]—and I would venture to suggest to the hon. Member who moved it that he ask leave to withdraw the Clause so that it can be discussed between now and the Report stage, when it would be given careful consideration to see whether it is one that is required by the present state of the law. If it would be fair to introduce an Amendment on the lines of the hon. Member's speech, we would give it consideration between now and the Report stage. I respectfully make an appeal to my Friend to withdraw the Clause.

Mr. D. HERBERT: In view of the hour and of the definite assurance of the Solicitor-General, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

NEW CLAUSE.—(Duty on Spirits.)

In lieu of the Customs and Excise payable on spirits consumed in Great Britain there shall from the fifteenth day of May, nineteen hundred and twenty-two, be charged, levied, and paid a duty of fifty-seven shillings and sixpence per proof gallon, and a duty of thirty shillings per proof gallon on spirits exported from Great Britain.—[Mr. Ford.]

Brought up, and read the First time.

Mr. FORD: I beg to move "That the Clause be read a Second time."

Sir R. HORNE: On a point of Order. Is it not the case that this Clause seeks to impose a duty on spirits which does not at present exist, and that it is a charge on those exporting spirits, and therefore out of order?

Mr. FORD: On a point of Order. I beg to protest because this is a countervailing duty. I went very carefully into the figures and discovered that the Exchequer would be exactly as it was.

Sir R. HORNE: On a point of Order. It is not the same person necessarily who is exporting who is paying Excise Duty in this country. That is a new charge. Whatever the result to the Exchequer, the round sum should be the same. The charge is being imposed on people who are exporting spirits.

The CHAIRMAN: I have read this Clause. All the Members have asked for a reduction in the Spirit Duty, but this Clause proposes a new duty on export. I do not know whether the hon. Member can contest that point.

Mr. FORD: Unfortunately, as I understood this Clause was in order, I did not bring the exact precedent with me, but a similar case was moved from the Benches opposite, and I think it was your ruling that, as there was no difference to the Exchequer, it was not considered to be a new charge.

The CHAIRMAN: If the hon. Member cannot show that the exporter would not have to pay more, the Clause is ruled out.

Mr. FORD: I think the answer is that the exporter does not pay more, but the exportee does.

The CHAIRMAN: The Clause is not in order.

NEW CLAUSE.—(Option as to payment of Estate Duty in certain cases.)

Where any land or chatels settled by Act of Parliament or Royal Grant pass on the death of any person any Estate Duty payable in respect thereof, or of any interest therein, under Sub-section (5) of Section five of the Finance Act, 1894, may, at the option of the person authorised or required to pay the same and notwithstanding anything in the said Section or in the Act of Parliament or Royal Grant settling the said land or chattels, he treated as a charge on and be raised and paid out of the corpus of such land or chattels, and the provisions of Section nine of the Finance Act, 1894, dealing with the charge of Estate Duty and the facilities for raising that duty shall apply.

The option given by this Section shall be exercisable in any case in which Estate Duty in respect of such land or chattels, or any interest therein, to which Sub-section (5) of Section five of the Finance Act, 1894, applies, is unpaid at the date of the passing of this Act, irrespective of the date of the death which gave rise to the claim for that duty.—[Sir R. Horne.]

Brought up, and read the First time.

Sir R. HORNE: I beg to move "That the Clause be read a Second time."
I agreed with the hon. Members who put down this Clause that I would accept it. Both the hon. Members responsible for the Clause were absent at the time it was called, but it was clearly a matter upon which the Committee was agreed, and, accordingly, I move it now.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

FIRST SCHEDULE.

1. A company which is aggrieved by any direction given under Section fourteen of this Act may appeal to the Special Commissioners against the direction by giving notice of appeal to the Clerk to the Commissioners within twenty-one days after the date of the notice, and the Commissioners shall hear and determine the appeal, subject as herein provided, and the provisions of the Income Tax Acts relating to appeals against assessments shall with any necessary modification apply for the purposes of an appeal under this provision.
2. If either the company or the Commissioners of Inland Revenue are dissatisfied with the determination of the Special Commissioners on any appeal under the foregoing provisions of this Schedule they may on giving notice to the Clerk to the Special Commissioners within twenty-one days after the determination, require the appeal to he reheard by the Board of Referees and the Special Commissioners shall transmit to the Board any document in their possession which was delivered to them for the purposes of the appeal.
The Board shall rehear and determine the appeal and shall have and exercise the same powers and authorities in relation to the appeal as the Special Commissioners might have and exercise, and the determination of the Board thereon shall be final and conclusive;
Provided that Section one hundred and forty-nine of the Income Tax Act, 1918 (which relates to the statement of a case on a point of law) shall apply with the necessary modifications in the case of any such rehearing and determination as it applies in the case of appeals to the General or Special Commissioners under the said Act.
3. The provisions of Sub-section (6) of Section seven of the income Tax Act, 1918, relating to the representation of the Crown on Super-tax appeals shall with the necessary modifications apply to any appeal under this Schedule.
4. The Special Commissioners may at any time by notice in writing require any company which appears to them to be a company to which Section fourteen of this Act applies, to furnish them with

(a) a statement of the actual income of the company from all sources, together
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with a copy of the company's accounts for any year or other period for which the company's accounts have been made up and such particulars as the Commissioners may reasonably require as to the income of the company and the manner in which the income has been dealt with; and
(b) a statement for the same period of the names and addresses and particulars of the respective interests of all members of the company.

5. In computing the actual income from all sources of a company for any year or period, the income front any source shall be estimated in accordance with the provisions of the Income Tax Acts relating to the computation of income from that source; except that the income shall he computed by reference to the income for such year or period as aforesaid and not according to an average of more than one year or by reference to any year or period other than such year or period as aforesaid.
6. If any company fails or refuses on being so required in accordance with the provisions of this Schedule to furnish a statement of actual income from all sources or renders a statement with which the Special Commissioners are not satisfied, the Commissioners may make an estimate of that income to the best of their judgment.
7. The apportionment of the actual income from all sources of the company shall be made by the Special Commissioners in accordance with the respective interest of the members, and the income as apportioned to each member shall, for the purposes of Super-tax, he deemed to represent his income from his interest in the company for the year or other period and shall he included in the statement of his total income or in an amended statement of total income which the Special Commissioners are hereby authorised to require and shall be deemed to be the highest part of that income.
8. The income apportioned to a member of a company under Section fourteen of this Act shall, for the purposes of Super-tax, be deemed to have been received by him at the date to which the accounts of the company for the year or period were made up.
9. Notice of any apportionment made by the Special Commissioners shall be given by serving on the company a statement showing the amount of the actual income from all sources adopted by them for the purposes of Section fourteen of this Act, and either the amount apportioned to each member or the amount apportioned to each class of shares, as they think fit.
A company which is aggrieved by any notice of apportionment shall be entitled to appeal to the Special Commissioners on giving notice to their clerk within twenty-one days after the date of the notice, and those Commissioners shall hear and determine the appeal and all the provisions of the Income Tax Acts and any regulations made thereunder relating to appeals against assessments and to eases to he stated for the opinion of the High Court shall with any necessary modification apply for the purposes of any such appeal.
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10. Where shares are registered in the name of a person who is not the beneficial owner thereof that person shall, if required by notice in writing by the Special Commissioners, furnish the name and address of the person or persons on whose behalf the shares are registered in his name.
If any person on being so required neglects or fails to comply with the notice within the time limited by the notice he shall be liable to a penalty of twice the amount of Super-tax that would be chargeable at the highest rate in respect of the amount of the income apportioned to such shares.
11. In this Schedule the expression "Board of Referees" means the Board of Referees for the purposes of Rule 6 of the Rules applicable to Cases I and II of Schedule D.

Sir R. HORNE: I beg to move, in paragraph 10, to leave out the words
Where shares are registered in the name of a person who is not the beneficial owner thereof that person shall, if required by notice in writing by the Special Commissioners, furnish the name and address of the person or persons on whose behalf the shares are registered in his name.
and to insert instead thereof the words
Any person in whose name any shares of a company are registered shall, if required by notice in writing by the Special Commissioners, state whether or not he is the beneficial owner of those shares, and if not the beneficial owner of those shares or any of them shall furnish the name and address of the person or persons on whose behalf the shares are registered in his name.
I think the Amendment explains itself.

Mr. MACCWISTEN: Does that apply solely to the companies mentioned in Clause 14?

Sir R. HORNE: Solely to the companies mentioned in Clause 14.

Amendment agreed to.

Schedule, as amended, ordered to stand part of the Bill.

Second Schedule (Procedure in connection with the determination of annual values for the purposes of Income Tax under Schedule A and Inhabited House Duty for 1922–23) ordered to stand part of the Bill.

Third Schedule (Enactments repealed) ordered to stand part of the Bill.

Bill reported; as amended, to be considered To-morrow (Thursday), and to be printed. [Bill 171.]

Orders of the Day — AIR MINISTRY (KENLEY COMMON ACQUISITION) BILL.

Major Barnes, Mr. Bowerman, and Lieut.-Commander Chilcott nominated Members of the Select Committee.— [Colonel Gibbs.]

The remaining Orders were read, and postponed.

It being after half-past Eleven of the Clock upon Wednesday evening, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

Adjourned at Seventeen Minutes after Four o'Clock